EACC goes after Kaberia, Mwendwa over Sh330m in CHAN stadium scam

The Ethics and Anti-Corruption Commission (EACC) has filed a suit seeking to recover Sh330.5 million from former Sports PS Peter Kirimi Kaberia and ex-FKF President Nicholas Mwendwa over alleged fraud linked to the 2018 CHAN stadium security contract.

The anti-graft agency claims the funds were paid to Auditel Kenya, a subsidiary of Spanish firm AUDITEL Ingenieria y Servicios S.L., for stadium security, lighting, and access control systems that were never delivered, despite substantial advance payments.

In its suit filed at Milimani High Court, the EACC accuses Kaberia, Mwendwa, 11 other senior officials at the Ministry of Sports and Culture, and several firms of corruption, fraud, money laundering, and irregular award of Tender No. MOSCA/CHAN/002/2017-2018.

The tender, valued at USD15,892,980.63 (approximately Sh1.5 billion), was meant for the design, supply, testing, commissioning, and supervision of security, access control, communications, audiovisual, and pitch lighting systems for various stadia ahead of the 2018 Africa Nations Championships.

The court papers reveal that the contract was awarded in 2017 by the State Department for Sports Development, Ministry of Sports, Culture and the Arts, to M/s Auditel Kenya in preparation for CHAN 2018, out of which Sh330,573,997.00 was paid as an advance payment.

Investigations revealed that the contract, executed on September 14, 2017, was signed by PS Kaberia on behalf of the Government of Kenya, Marcos Gonzalez Puente on behalf of M/s Auditel Kenya, and witnessed by Mwendwa, then FKF President, and Mr Herbert Mwachiro, the CHAN 2018 Event Director.

The EACC says that the procurement of Auditel Kenya, leading to the signing of the contract, was single-sourced in violation of public procurement laws.

The anti-graft agency says the CHAN stadium contract with Auditel Kenya was riddled with irregularities, including the absence of tender documents, bid security, evaluation committees, professional opinions, letters of award and acceptance, contract oversight teams, and validated bank guarantees.

Additionally, no deliveries were made under the contract despite the advance payment.

Exactly one month and nine days after the contract was signed, Auditel Kenya raised an invoice demanding an advance payment of USD 3,687,171.51.

On January 19, 2018, Sh330,572,998.00 was transferred to Auditel Kenya’s account at Bankinter, Madrid, Spain.

The account signatories were Mr Enock Ondwari Onditi and Mr Stephen Njoroge Muthuma.

The EACC says that the payment was made without a Milestone Completion Certificate, which is a mandatory requirement for facilitating advance payment under the contract.

At the end of the four-month contract period, EACC says its investigations established that no access control, security, or pitch lighting systems had been installed in any CHAN 2018 stadium.

"No work was performed, inspected, and accepted; hence no consideration was received for the said sum of Sh 330,572,997.52 paid by the Government of Kenya," EACC Lawyer Francis Makori states.

More damning is the allegation that not too long after receiving the said sum of Sh330,572,997.52, Auditel Kenya and its parent company, AUDITEL Ingenieria y Servicios, S.L, domiciled in Spain, were dissolved, leading to loss of public funds.

EACC's investigations further established that Auditel Kenya was not registered as a contractor with the National Construction Authority (NCA) as required under Section 15 of the NCA Act, 2011, meaning the company should never have been awarded the tender in the first place.

The anti-graft body also uncovered alleged bribery in the scheme.

Court papers claim that Sports Kenya official John Ruga received a bribe of Sh 3.5 million from Mwendwa on January 9, 2018, as a reward for causing Auditel Kenya to be awarded the impugned Tender through direct procurement and for the unlawful payment of public funds.

The following day, January 10, 2018, Ruga allegedly received another bribe of Sh200,000 from Mwendwa for the same purpose.

The anti-graft agency also alleges that Kaberia failed to report the use of the direct procurement to the Public Procurement Regulatory Authority within the mandatory fourteen (14) days and to provide a justification for the use of the method contrary to Regulation 64 of the Public Procurement and Disposal Regulations, 2006."

Other defendants in the suit include Haron Komen Chebet (former Director of Administration), Isaac Okoth Omogi (former Head of Procurement Unit), and Stephen Njoroge Muthuma (former Senior Finance Officer), all from the Ministry of Sports and Culture.

Individual defendants Samuel Mbaa Njoroge, Marcos Gonzalez Puente, Anthony Mwangi Kimathi, and Kitheka Muema are accused of corruption, acquisition, and laundering proceeds of corruption, fraud, and illegalities.

Three companies, Restea Enterprise Limited, Leasepride Limited, and Leasepath Limited, are also named for allegedly laundering and or receiving proceeds of corruption.

The EACC claims these companies received substantial sums from Auditel Kenya in suspicious transactions.

For instance, Restea Enterprise Limited allegedly acquired USD 237,804.57 (approximately Sh25.6 million) on March 15, 2018, while Leasepride Limited received multiple payments totaling USD 89,685.52 (approximately Sh9.6 million) between January and July 2018.

In its prayers to the court, EACC is seeking a declaration that the procurement of works and services in Tender No. MOSCA/CHAN/002/2017-2018 was unlawful, fraudulent, null, and void.

The commission also wants the court to declare that the contract entered into on September 17, 2017, by Auditel Kenya and the Ministry of Sports, Culture, and Arts was similarly unlawful, fraudulent, null, and void.

EACC is demanding the ordered compelling return of Sh330,572,997.52 from Kaberia, Ruga, Chebet, Omogi, Muthuma, and Mwendwa, jointly and severally, to be paid to the Government of Kenya, plus interest at court rates.

The anti-graft body is also seeking general damages against the six for breach of trust and fiduciary duties, as well as costs of the suit.

EACC advocate Makori said that despite repeated demands and notices to recover the fraudulently paid public funds, the Defendants have failed or refused to make amends to the Government of Kenya.

The case is pending hearing.