Ruto questions legality of railway tender even as he attended launch

Even as Deputy President William Ruto stood next to President Uhuru Kenyatta during the ground-breaking ceremony for the standard gauge railway on Thursday, details are emerging of last-minute efforts by his office to ditch the project.

(VIDEO: Sh1.2trn railway for East Africa)

In a letter dated October 28, the Deputy President’s office asked Attorney-General Githu Muigai to give an opinion on the legality of the project, with a view to halting the process due to “numerous anomalies in the tendering award process”.

“By this letter, we kindly request your office to expeditiously review the project documents and to render the requisite legal opinion regarding the same on or before 5th November 2013,” the letter signed by the Chief of Staff, Ms Marianne Kitany, reads in part.

“It is imperative that His Excellence the President should not be seen as giving the project his seal of approval unless all the required procedural and legal steps have been undertaken, and the project is one which is completely above board.”

The letter is copied to Transport Cabinet Secretary Michael Kamau, the Public Procurement Oversight Authority and Mr Joseph Kinyua, the Chief of Staff in the Office of the President.

Mr Kamau has defended the project saying there was no irregularity occasioned by failure to conduct a competitive bidding, adding it was a government-to-government agreement.

The Ministry of Transport and the Kenya Railways have pushed for this position even when they appeared before Parliament two weeks ago despite having received the AG’s opinion faulting the reasoning.

Interestingly, it is the current Principal Secretary for Transport, Mr Nduva Muli, who was the managing director at Kenya Railways when the deal was struck.

The AG’s opinion questions why Mr Muli, in his capacity as managing director of Kenya Railways, flip flopped in choosing the procedure to follow, only picking two processes which do not allow competitive bidding.

In an opinion rendered to Public Procurement Authority, the AG faulted the process used to award the tender.

In his opinion, which is likely to carry weight in court in a case filed by a trade union, given that he is the chief government legal adviser, Mr Muigai noted that the tender award process followed by Kenya Railways Corporation “raised suspicion”.

“We have reviewed the documentation of the project and have detected numerous prima facie anomalies in the tendering award process and documentation contrary to the Public Procurement and Disposal Act 2005,” the letter reads in part.

PROCUREMENT ACT

The AG faulted the use of the government-to-government negotiated loans to avoid following the provision of the Public Procurement Act which requires all projects above Sh500,000 to use open tender to pick suppliers.

In a letter dated October 3, 2012, Kenya Railways awarded China Road and Bridge Corporaton the contract based on direct procurement process.

However, in an apparent afterthought, Mr Muli wrote to China Road and Bridge Corporation in a letter dated March 14 to withdraw the letter awarding the contract.

This after the PPOA questioned the process and demanded Kenya Railways to justify why they were using a direct procurement process instead of competitive bidding.

On March 27, Kenya Railways wrote to PPOA, saying they had cancelled the tender and explained this was informed by the fact that the procurement is a government-to-government contract which is exempt from the Procurement Act.

“Our report submitted to you dated October 2, 2012 showing this as a direct procurement was in error, and we wish to withdraw the same,” Mr Muli wrote.

It is this flip flop by Kenya Railways that made the AG to question why the corporation was avoiding transparency in awarding the contract.

“I must record that it is worrying that a procuring entity can pick and choose alternate procurement methodologies ... neither alternative admits of open competition,” the AG noted.

Equally, the AG added, even if the contract was a government-to-government one, Kenya Railways was not exempt from conducting competitive bidding in selecting the winner.

“Government-to-government agreements also demand compliance with procedures outlined under the Public Procurement Act,” says the AG in his opinion.

Prof Muigai further told the PPOA that “government to government” agreements are not a method of selecting suppliers or supporting awarding of a contract.

In what appeared to be a call to respect Kenya’s sovereignty, the AG further noted that “development partners – China in this case – should align themselves to the systems, standards, procedures and development priorities of recipient states in order to promote accountability.”

Mr Kamau, however, seems to fault this, telling Parliament that Kenya had no alternative other than to follow the Chinese rules as Beijing was the one footing the bill. 

“… We had to follow their (China’s) procurement procedure,” Mr Kamau told the House. The AG, however, says following the procurement law is mandatory when taxpayers’ money is being used to fund a project. In this, the funding is shared at 85:15 between the Chinese loan and funding from taxpayers. Taxpayers are already feeling the pain after the imposition of a 1.2 per cent railway development levy.

It has also emerged that members of the parliamentary committee on Transport, Public Works and Housing, who were investigating the matter, are fighting over a trip they made to China as part of their investigations on the tender. 

The committee, chaired by Starehe MP Maina Kamanda, is investigating why the tender was not subjected to competitive bidding and whether China Road and Bridge Corporation has the capacity to implement the project.

On return to Kenya the committee members have been accusing each other of having received preferential treatment while in China. None of the MPs, however, wants to go on record. At the same time, the High Court has allowed a trade union to contest the award of the tender.