The spotlight of a multi-agency team has been turned on the staff of two roads agencies over questionable business dealings that have also attracted the attention of the National Assembly.
Details of bank transactions traced by the Financial Reporting Centre (FRC) appear to point to the two State agencies doing business with companies associated with their employees.
A document seen by the Sunday Nation highlights a series of suspicious transactions and includes an MP from Kitui County and several people identified as employees of the two agencies as well as individuals suspected to be connected to them.
The dossier being used in the investigation shows how government infrastructure tenders are susceptible to suspected corruption and price inflation engineered by its public officers. In some instances, once payments are made to the companies, multiple cash withdrawals are done.
The company names, account numbers and directors shows that the withdrawals are usually Sh999,999 and below to evade the reporting threshold of Sh1 million as provided for in law.
The document further notes that the destinations of the funds withdrawn remain unknown as they cannot be traced.
The inquiry came as nominated MP Godfrey Osotsi — in a question to the Ministry of Transport, Infrastructure, Public Works and Housing Development — alleged there was suspicion that the two roads agencies are inappropriately engaged directly or indirectly with companies associated with their employees.
In his written question that Cabinet secretary James Macharia is expected to respond to through the Transport Committee, asked if the authorities were aware “ that firms, directly or indirectly associated with employees” of the two agencies “have been engaging in financial and procurement malpractices”.
The nominated MP notes that the malpractices are contrary to the Public Procurement and Asset Disposal Act, the Proceeds of the Anti-Money Laundering Act and the Leadership and Integrity Act.
Mr Osotsi further wants to know when the ministry plans to undertake a lifestyle audit on the staff in question for the period 2015 to date.
“What is the status of investigations into these malpractices by the FRC and other investigative agencies and when the findings, if any will, be made public?” he poses.
FRC is a State institution created by the Proceeds of Crime and Anti-Money Laundering Act.
The document, for example, flags a company that has been doing business with one of the roads agencies in Kiambu County.
The firm has two directors who are a couple with seven other related accounts that also receive remittances from the county.
Six out of the seven accounts were opened on the same day — February 9, 2018.
The company has so far received Sh846.1 million in its accounts. The accounts are characterised by rapid movements of funds once they are credited.
So far Sh479.3 million has been received from the county, Sh287.03 million from a roads agency and Sh79.81 million from another agency.
An investment firm associated with an employee at a roads agency opened a bank account on February 11, 2013, in Kericho.
Sh294.4 million
Between 2018 to date, the firm received Sh294.4 million from two roads agencies in suspicious dealings. The company has two directors (names withheld) and is alleged to be one of those used to tap roads tenders.
“The company owner is an employee” at a State roads agency and has several accounts receiving funds from his employer. He is suspected to be the ultimate beneficial owner, according to the investigation.
“The investments firm is one of his proxy accounts as evidenced in transfers from the company to him and his wife. Funds withdrawn in cash are hard to trace,” the document notes.
Another company with a sole director and registered on June 21, 2020, received Sh3.4 million from the two roads agencies.
The payment is said to have been the only credit to the account so far and the debits on the account have been done in small bits over the counter at a bank branch in Kapsabet.
“The documentation presented for the transaction seems inconsistent and there is no demonstration of financial muscle to support the tender,” the document says.
The inquiry suspects inconsistent documentation indicates that the project was supposedly undertaken before the tender was accepted by the contractor.
“The client failed to provide a tender notice and the company was registered exactly a month before it is said to have submitted its bid, which was also not provided to the bank.”
It is also indicated that another company with two directors was incorporated on April 16, 2019, and an account number opened on July 6, 2019, at a bank in Mandera.
On February 20, 2020, the account started receiving funds from the county government and “entities that are under it”.
So far the account has received a total of Sh33.7 million.
The account has also received funds from a roads agency.
The document further notes that once the funds have been received, they are either withdrawn in cash or transferred to another account (name withheld).
On November 19, 2020, for instance, the account received four cheques totalling Sh7.96 million.
Three withdrawals of Sh980,500, Sh945,000 and Sh950,000 were made immediately after the funds were paid.
The account holder would later transfer Sh3 million to her account. In the same personal account, she received Sh3.4 million from another firm. Before the transfer, the company had received Sh3.91 million from a water agency.
“The entities are newly registered and it is not clear whether they are qualified to carry out the tenders. Preference of large cash withdrawals may be to avoid an audit or pay kickbacks,” the document notes.
Also fingered is a company whose bank account was opened on March 13, 2009, in Kisumu.
It has two account signatories with one of them being a teacher as evidenced by salary remittances in her account.
The account has been receiving funds from a roads agency.
This year alone the account has received over Sh36 million and “nearly all of the remittances are followed by large cash withdrawals,” reads the document.
“One of the signatories (name withheld) is a teacher, her salary remittance is not commensurate with the volumes moved in the company.”
Also dealing with the government agencies is a company that was incorporated on November 11, 2014, whose account number was opened on June 10, 2015, in Thika. The signatories to the entity in the construction business are two.
One of the directors used to work for Kenya Airways as per the salary credits in her account from November 21, 2013, up until May 31, 2016, when the salary credits ceased.
The entity has been receiving payments from the two roads agencies and other entities linked to various tenders.
On October 19, 2020, it received Sh3.5 million from the Mombasa office of a roads agency.
“The client rapidly withdrew the funds and made one cheque payment. The supporting documents provided were award notification and certificate of work done.”
The client also withdrew Sh950,000 on October 27, 2020, suspected to be a structured transaction to avoid the reporting threshold.
No supporting documents — voucher, contract agreement and contract acceptance, were provided, raising suspicion on whether the contract was awarded under the due process of tendering.
The activities of a construction company owned by an MP from Kitui has also been flagged.
The company had an account number opened on August 28, 2018. Two months after the account was opened, it received Sh29.98 million.
The funds were immediately withdrawn through cheques transactions.
The MP is also a director of another company, which received Sh2 million from a roads agency’s Kitui branch. This was followed by large cash withdrawals and bank transfers to the construction company’s account. BY DAILY NATION