House throws out petition to investigate Safaricom on tenders

National Assembly Speaker Justin Muturi asked Nairobi businessman Michael Ngugi to petition the relevant regulatory bodies before seeking Parliament’s intervention. PHOTO | FILE 

By GEORGE OMONDI, omondi@ke.nationmedia.com

In Summary

• National Assembly Speaker Justin Muturi said a public scrutiny into Safaricom could in future create a procedural dilemma with regard to parliamentary investigations into the activities of private entities.

Parliament has thrown out a petition asking it to investigate alleged multi-billion-shilling tendering scam at Safaricom, bringing to a close an issue that has stoked controversy between Kenya’s largest telecoms operator and its partners in the past three months.

National Assembly Speaker Justin Muturi said a public hearing into the “weighty concerns” raised by Nairobi businessman Michael Ngugi could in future create a procedural dilemma with regard to parliamentary investigations into the activities of private entities.

Mr Ngugi had in May petitioned Parliament to openly investigate claims of corruption involving suppliers and top executives of Safaricom as detailed in a leaked KPMG forensic audit report.

Safaricom is 35 per cent owned by the Treasury on behalf of the Kenyan citizens, while 40 per cent stake in the firm belongs to British telecoms company Vodafone.

Millions of Kenyans also privately own shares in the region’s most profitable firm through the Nairobi Securities Exchange.

Mr Muturi, citing Article 95(2), which allows Parliament to resolve issues of concern to the public, had on May 5 handed departmental Committee on Finance, Planning and Trade 60 days to investigate the alleged irregularities.

But Mr Muturi last week made a U-turn with a ruling that asked Mr Ngugi to petition the relevant regulatory bodies before seeking Parliament’s intervention.

“Whereas private companies such as Safaricom are not free from public scrutiny of Parliament, such scrutiny obligates Parliament to exercise prudence and ask itself whether the attention of other specialised and complementary institutions has been drawn to the existence of the claim,” said Mr Muturi in a letter dated August 16.

Mr Muturi said seeking lawmakers’ intervention before regulatory oversight bodies such as Capital Markets Authority and the Nairobi Security Exchange review alleged irregularities risks rendering Parliament a mere “conveyor belt”.

“Even if the departmental Committee on Finance, Planning and Trade were to proceed to consider the issues raised in your petition, it would not be in a position to resolve them with finality as they have to be presented to relevant specialised bodies,” said Mr Muturi.

The Speaker said Mr Ngugi had also violated parliamentary Standing Order 233(F) by failing to indicate in his petition whether any efforts had been made to have the matter addressed by the regulatory agencies.”

“In this regard, therefore, your petition as submitted and originally committed to the committee is in admissible,” Mr Muturi ruled.

Safaricom chief executive Bob Collymore who asked KPMG to conduct the forensic audit, had earlier promised to act on the findings of the report.

The letter signed by National Assembly Clerk Justin Bundi has been addressed to Mr Ngugi and copied to Finance, Planning and Trade Committee chairperson Benjamin Langat.

Mr Langat had earlier announced intention to summon Safaricom suppliers, contractors and executives named in the KPMG forensic audit.

The KPMG audit for the period between September 2013 and August 2015 was ordered Mr Collymore. It uncovered 23 procurement-related irregularities worth Sh289.4 billion.

READ: Senior Safaricom executives named in billion shillings procurement scam

The report had accused some Safaricom executives including chief financial officer John Tombleson of involvement in irregular purchasing transactions.

Mr Tombleson alongside four other senior executives were found to have influenced the purchase of a Sh1.15 billion five-acre piece of land at Garden City in Nairobi where the telco plans to build it headquarters.

KPMG auditors found that he began talks with private equity firm Actis to buy land at Garden City eight months before Safaricom’s board of directors considered a plan to build an office complex dubbed ‘One City’ project.

Safaricom’s board of directors was first informed of the need to consolidate the company’s operations under one roof on May 12, 2014 and the land finally bought from Actis in July 2015.

The report also raised queries relating to payments worth Sh1.2 billion to seven firms to carry out marketing activations to promote Safaricom’s brand and products.

Other tenders probed by KPMG is the procurement of corporate promotional merchandise totalling Sh201 million from Vajas Manufacturers Ltd, Huawei’s $12.5 million contract to upgrade the M-Pesa platform, and South Korean firm Kaon Media supply of set-top boxes ($1.6 million).