Why consumer lobby group COFEK wants Kenya pipeline tender award revoked

Days after Zakhem International construction limited won the tender award to construct the new Kenyan pipeline from the port city of Mombasa to Nairobi the Consumer Federation of Kenya has called for a revocation of the tender citing irregularities. COFEK is also citing the company’s controversial awarding of a tender in Liberia where it was awarded a bid despite quoting double its nearest competitor. Read this:

Reasons Kenya Pipeline Corporation must revoke the Sh43 billion Nairobi – Mombasa pipeline tender to Zakhem Construction

The Mombasa – Nairobi pipeline (Line 1) replacement project tender awarded to British based Lebanese Zakhem International Construction Limited, at a cost of Sh43 bn, need to be revoked for various reasons.

First, the Sh10 bn discrepancy between Kenya Pipeline Corporation (KPC) estimate of Sh53 bn is not only suspect but raises questions as to whether the project design and specifications may have been quietly amended to suit the lower financial quotation and on which basis Zakhem was scored highly.

Kenyans need to know how, professionally, such huge variation could be entertained without drastic review of the tender specifications. The team behind the initial estimates certainly owe Kenyans an explanation.

When colossal amounts of taxpayers funds are spent on such investments, the balance between pricing and technical quality assurance must be guaranteed.

Second, the rush to declare Zakhem a winner need to be explained especially in terms of the numbers of both financial and technical evaluators as well as their individual competencies.

Third, the integrity of Zakhem International Construction Limited is in question. Credible information of how the company was involved in bribery to win similar tenders in Liberia and Ghana need to be investigated.

Article 201(a) of the Constitution emphasizes that “there shall be openness and accountability including public participation in financial matters”. Clearly, there has been missing transparency and accountability on this tender.

We urge the bidders who unfairly lost out in the tender to make an appeal and or provide us details to legally challenge this skewed procurement process.

Meanwhile, we hope that the Public Procurement Oversight Authority and the Ethics and Anti-Corruption Commission shall immediately commence parallel investigations into the tender

Anyone with information on the tender is requested to get in touch with us in confidence on: hotline@cofek.co.ke

We urge our mainstream media to remain objective in reporting about this tender. Playing public relations for either Kenya Pipeline or Zakhem will hurt public interest.

“The tender evaluation team was summoned for financial evaluation through an email in the morning, the Tender Committee met immediately thereafter, went through the financial evaluation report, deliberated and awarded the tender. The award letter was drafted and signed by the MD (who was supposed to be in Morendat Training Center, Naivasha for a retreat with other Board members). All these Between 08.00hs and 17.00hrs”, Confidential Source


New storm brews over the Kenya Pipeline tender bidding


1. (SBU) SUMMARY: President Ellen Johnson Sirleaf dismissed the head of the state-owned Liberia Petroleum Refining Corporation (LPRC) on September 5, following a Ministry of Justice probe into the alleged acceptance of bribes in exchange for a USD 24.8 million concession. Sirleaf’s sacking of a long-time advisor and confidant illustrates the pressure she feels to demonstrate zero-tolerance toward corruption. The action also signals that the checks and balances introduced to the concessions process since 2006 do indeed leave would-be crooks less opportunity to cut side deals for their personal enrichment. END SUMMARY.

2. (U) In July, LPRC Managing Director Harry Greaves signed a USD 24.8 million contract with Zakhem International Construction, a British-based, Lebanese-owned construction company, to rehabilitate and expand the facilities at the LPRC’s product storage terminal (PST). The terminal needs major renovation and overhauling, as its 1950s-era tanks are in very poor condition, and cannot accommodate Liberia’s steadily rising demand for fuel. The LPRC had issued an international competitive bid, which produced two finalists: Zakhem estimated the cost of the project at USD 24.8 million, while another construction company, Mechanical Engineering Group (MEG), submitted a USD 12 million bid. Despite the wide price discrepancy, Greaves unilaterally signed a contract with Zakhem, claiming MEG’s proposal lacked the maintenance and improvements that Zakhem would offer.

3. (U) Several weeks after Greaves signed the contract, members of the House of Representatives sounded the alarm. Representative Zoe Pennue (Grand Gedeh County), the former LPRC deputy for operations, warned lawmakers that the contract’s value was overstated and required clarification. He also accused Greaves of contravening rules of the Public Procurement and Concession Commission, and failing to communicate with the House Committee on Public Utilities and Corporations, even though the Public Procurement and Concessions Act entitles the head of a state-owned enterprise to sign a contract without further consultations, provided it is not sole-source.

4. (U) When Greaves refused to cooperate with a House committee formed to investigate the contract, President Sirleaf established a parallel committee headed by former Chief Justice Henry Reed Cooper. However, Greaves accused a member of the President’s committee, Deputy Minister of Justice Alousius Jappah, of soliciting a USD 300,000 bribe in exchange for clemency, and proffered a tape recorded conversation to prove his claim. Following the review of evidence, the President assembled yet another team to investigate those allegations.

5. (U) The Zakhem committee, led by Justice Minister Christiana Tah, determined that both Jappah and Greaves committed bribery, citing a provision in Liberia’s Penal Code that penalizes both the person who proffers the bribe, and the recipient who verbally accepts the bribe or fails to reject it outright or report it to the authorities (even if no money changes hands). The President dismissed Jappah August 27 and Greaves September 5.

6. (U) The Zakhem affair was the second time Greaves unilaterally concluded contracts of an ambiguous or untransparent nature. In 2007, he announced a deal for Nigeria to supply 10,000 barrels of oil to Liberia. The Legislature questioned the contract, and the media cried foul when Greaves refused to disclose the price of the oil or the terms of the contract. While the GOL ultimately cancelled the deal, the President did not sanction Greaves.

7. (SBU) COMMENT: Greaves’ political descent, after three decades as a protege, friend and close advisor to the President, is a matter of some curiosity. While the Governance and Economic Management Assistance Program (GEMAP) advisor at the LPRC believed that the Zakhem contract complied with all concessions procedures, and observed no evidence of corruption, Greaves’ reputation had been tarnished by the questionable Nigerian deal two years earlier. On a positive note, the National Legislature played a rare role in its demand for a transparent and fiscally sound contract, even beyond what the law nominally requires. The Legislature’s constructive role may signal that unrelenting media coverage and GEMAP’s efforts have sensitized Liberians to the need to hold political leaders to a standard of integrity that exceeds minimal procedural requirements. ROBINSON

Source COFEK Website

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