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Former Finance Cabinet Secretary (right) and Principal Secretary Kamau Thuge (left) when they were charged with corruption in July 2019.


New twist as Ex-PS Thugge set to testify against Rotich

NAIROBI, Kenya Jan 12 – Former Treasury Principal Secretary Kamau Thugge will now testify against his former boss Henry Rotich in the Arror and Kimwarer dams case.

On Tuesday, the Director of Public Prosecution Nordin Haji applied to withdraw charges against the former Principal Secretary so as to become a prosecution witness. 

He also withdrew charges against Chemutai Koech, an officer who worked for the Treasury. 

Subsequently, anti-corruption Chief Magistrate Douglas Ogoti directed the prosecution to supply Thugge and Koech’s statements to the defense lawyers within two weeks to enable them to prepare.

The two were jointly charged with the former Cabinet Secretary for abuse of office, corruption among other charges.
The court further directed that the two be discharged refunded all their cash bail as well as their travel documents.

The three were arraigned alongside 25 others on July 2019 following a fraudulent contract awarded to a foreign company for the construction of Kimwarer and Arror dams.
They were accused of taking part in fraud in the planned construction of two multi-purpose dams projects in Kimwarer and Arror, Elgeyo Marakwet, estimated at Sh63 billion.

Charges facing them include conspiracy to defraud, failure to comply with applicable procurement laws, engaging in a project without prior planning and abuse of office among other economic crimes.
“The investigations established that government officials flouted all procurement rules and abused their oath of office to ensure the scheme went through,” Haji told the court on their initial appearance.
While detailing their crimes, Haji said the officials had breached public debt regulations.
“If this project was carried in the strict adherence to the law and existing policies in place to safeguard public interest, it should not have cost Sh63 billion. The evidence establishes malpractices that impacted on our national debt,” he said.
“Some Sh4.6 billion was borrowed in addition to the principal amount to pay interest in advance during the construction period, which to date has not commenced. As a country we continue to pay interest on the loan. We borrowed, the loan had interest, we borrowed more money to pay the interest which also attracted interest,” Haji said, “A further Sh643 million was released by the National Treasury as a counterpart funds which was meant for the resettlements of the persons that would be affected by the same projects for the compensation of land acquired. However, there is no evidence that land has been acquired four years down the line. Furthermore, Kenya Forest Service any excision of forest land, pointing to significant adverse impact on the forest ecosystem.”

Rotich is on record confirming that the government had spent Sh12 billion to secure funding for the construction of the two dams, with the sum having been paid out to meet set conditions before the actual funding.

“Like any other standard loan facility signed by the government, there are several conditions to be met before funds are available to the borrower and the contractor to commence work,” he said in a press statement published in local dailies at the height of the police investigations in March.

The Sh12 billion was part of the conditions precedent outlined in a financing agreement approved by the Attorney General before the National Treasury signed it on April 18, 2017, he explained at the time.

The amount entailed an arrangement fee of Sh545.9 million, a Sh359.5 million commitment fee, a Sh3.5 million agency fee and a Sh11.1 billion insurance premium paid to an Italian contractor.

According to Rotich, the government-owned Italian firm – Servizi Assicurativi del Commercio Estero (SACE) – was paid a Sh7.8 billion advance fee representing 15 per cent of the contract amount.

The National Treasury at the time denied reports that up to Sh21 billion had been paid out in respect to the construction of Arror, and Kimwarer dams before the commencement of works.

The figures provided by the Treasury inclusive of the Sh12 billion loan facilitation fee add up to Sh19.8 billion, with Rotich saying the Sh7.8 billion advance payment was in line with Section 147 (1) the Public Procurement and Asset Disposal Act.
“Under exceptional circumstances, advance payment may be granted and shall not exceed 20 percent of the price of the tender and shall be paid upon submission by the successful tenderer to the procuring entity of an advance payment security equivalent to the advance itself and that security shall be given by a reputable bank or any authorized financial institution issued by a corresponding bank in Kenya recognised by the Central Bank of Kenya, in case the successful tenderer is a foreigner,” the Act provides.

Rotich dismissed the alleged financing of the projects without submission of designs saying the procuring ministry – Ministry of East African Community and Regional Development – adopted a design-build model which he argued had been proved to be cheaper and effective.

But Haji disagrees and has accused him of committing economic crimes.

The design-build model allows the firm contracted to solely engineer, procure, and construct, as well as enter into financing agreements.
The contractor – SACE – covers 85 percent of an estimated Sh52 billion contract amount with a consortium of banks funding the remaining fifteen percent.

An Italian banking group, Intesa Sanpaolo, is said to have signed the facility agreement on April 4, 2017 on behalf of three other banks – Paribas Fortis S.AIN.V, UniCredit S.P.A, and UniCredit Bank.

The debate over misappropriation of funds allocated for the construction of the Arror and Kimwarer dams took a new twist Thursday after Deputy President William Ruto dismissed a Sh21 billion figure reported in a section of dailies.

“The money in question is about Sh7 billion and for every coin that has been paid, we have a bank guarantee. No money will be lost because we’re a responsible government; we’ve engaged every arm of government to ensure public resources are safe,” he said during the release of the 2017/18 State of Judiciary and Administration of Justice report.

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