Kenya Power staff acquitted in Sh159m procurement case that cost top managers jobs

Seven Kenya Power employees have been acquitted in a high-profile case that involved Sh159 million procurement and where the prosecution was put in the spotlight over flawed pursuit of corruption allegations.

The case centred on Kenya Power’s 2017 pre-qualification of Labour and Transport (L&T) contractors, a process that the prosecution claimed was irregular and had been designed to benefit selected firms.

It further alleged that Kenya Power officials conspired to bypass procurement laws, leading to questionable payments running into millions of shillings.

L&T contractors are among the most critical services that Kenya Power outsources, in the delivery of day to day work such as building and maintaining power lines and substations.

The officials were charged with conspiracy to commit economic crime, breach of procurement laws and abuse of office. The charges were dismissed on April 17 and the accused persons set free.

In its ruling, the court found that the prosecution had built its case on a fundamental legal error, whereby it had treated the pre-qualification exercise as a full procurement tender. This, the judge said, meant that key charges were anchored on the wrong provisions of procurement law, rendering them defective from the outset.

The court noted the distinction between a tender and a prequalification, whereby the Procurement Act does not prescribe a mandatory quorum for opening pre-qualification applications, unlike for formal tenders.

This, the court noted, made a pre-qualification materially different from a tender, which the prosecution failed to take into account while framing the charges. 

“This Court reaches a conclusion that ab initio, there was a serious misapprehension of the PPADA (Public Procurement and Assets Disposal Act) which triggered a fatal legal domino effect,” said the judge in his ruling. 

“The said misapprehension of the PPADA led to a serious misdirection in law and specifically in respect to the fundamental dissimilarities between a pre-qualification and a tender… which in turn led to misapplication of the law, which led to the charges on record which are divorced from the factual matrix of the case rendering them deficient of legal and factual precision of the military required of proper charge.”

The court noted that the prosecution failed to prove beyond reasonable doubt that there was a conspiracy or that any benefit was conferred improperly or unlawfully.

It further said that even if there were procedural errors, they did not necessarily amount to criminal conduct and could be attributed to human frailty or errors made in good faith and that the charges were "divorced from the factual matrix of the case," stemming from a misapprehension of the legal differences between pre-qualification and a tender.

The court said the prosecution must prove a deliberate intent to break the law, rather than just pointing to an administrative mistake.

“The court should always bear in mind a presumption that Parliament did not intend to make criminals of persons who were in no way blameworthy in what they did,” said the judge. 

“What should attract punitive action is bad faith (mala fides), in which case a decision maker seeks to achieve a purpose other than the purpose for which the power to make the decision has been granted by Parliament and ordinarily manifested by deliberate breach of due process or where the decision maker appears to have been influenced by irrelevant considerations.”

“In this regard, if there is clear evidence of intention to act illegally or outside the scope of authority, dishonestly or with malice, it then amounts to bad faith for which the defence of good faith is unavailable… to lose the immunity of “good faith” involves more than negligence or an error in judgment. If there is an honest attempt to give effect to the law, the good faith defence should prevail.”

The 2018 arrests and subsequent prosecution was among the high-profile corruption cases in Kenya.

The allegations claimed nearly the entire management of Kenya at the time, including its chief executive and nine general managers, who at the time faced legal action or dismissal.

In all, 19 senior officials were arrested over claims that their actions led to fraudulent payments of Sh159.2 million to entities that were unprocedurally pre-qualified.

Out of 525 pre-qualified companies, according to court documents, 136 could not be authenticated by the Registrar of Companies, and 262 lacked National Construction Authority (NCA) certificates. Some of the companies (39) had not been incorporated at the time of the tender evaluation but ended up being pre-qualified. 

Nine of the officials were taken to court and charged with conspiracy to commit an economic crime, willful failure to comply with procurement laws, and abuse of office.

These included Ken Tarus, the then Kenya Power CEO, who was among the accused persons but the case was in February 2023 withdrawn. Tarus, had been appointed in an acting capacity in January 2017 and confirmed later in August that year. He was suspended in July 2018 following the allegations of procurement irregularities. 

Also accused was Eng Daniel Tare, the GM Network Management, but has since been dropped following his death.

Of the seven whose charges continued to full hearing, the court said prosecutors failed to prove any criminal conspiracy or intent, noting there was no evidence of coordination among the accused to commit an offence. It also found no proof that the officials conferred improper benefits to contractors or that the company suffered a financial loss.

On the contrary, evidence presented showed that payments made were for services actually rendered, weakening claims of economic crime.

The ruling also criticised the prosecution’s reliance on audit findings, stating that procedural irregularities alone do not amount to criminal liability without clear evidence of fraud or unlawful gain.

The arrests caught the then Energy Cabinet Secretary Charles Keter by surprise, who would lament that he felt like a coach whose entire team had been taken away before a crucial match.

“It’s such a difficult time for me to even talk when we have a team of competent and intelligent engineers in court. We have lost the best. That I’ll say at any forum,” Keter said at a press conference he called shortly after to announce an interim management team at Kenya Power.