The name of Tourism Cabinet Secretary Najob Balala and Kenya Tourism Fund Chief Executive Officer (CEO) David K. Mwangi among others are featuring prominently into the ongoing probe of irregular payments in the acquisition of Kenya Utalii College, Coast Branch, now renamed Ronald Ngala Utalii College.
According to investigations by The Informer, the matter which is part of an ongoing active investigation by the anti-graft body vide inquiry file number EACC/MLD/FI/INQ/4/2021 show how Kenya Tourism Fund fraudulently paid Sh8.5 billion more to acquire the college.
According to preliminary investigations findings, the cost of acquiring the college is said to have been inflated to Sh10.4 billion against the initial projected cost of Sh1.95 billion.
Already, the Ethics and Anti-Corruption Commission has seized of the matter.
Among the persons of interest mention include CS Balala, Tourism Fund CEO Mwangi who was at the time serving as the accountant at the institution.
Others are former Tourism Fund CEO Joseph Cherutoi, the then deputy Head of Finance Margaret Njoka and then acting Procurement Officer Gerald Omondi.
The matter is also under investigation by the national Assembly’s Public Investments Committee (PIC).
In what points to a well premeditated plot to fleece taxpayers’ money, the project was irregularly and against legal advice from the Attorney General, moved from Utalii College, which Cabinet had approved as the implementing agency, to the defunct Catering and Tourism Development Levy Trustee.
The transactions in relation to project, which have become the subject of investigations by PIC, also show how suspect accounts could be used to siphon off public funds.
One such account is the defunct Catering and Tourism Development Levy Trustee bank account. Although this body ceased to exist, the bank accounts are still active and are shown to have received Sh435 million in January 16 and another Sh64 million in February 16.
This payment from the National Treasury was allegedly meant for contractors. Tourism Fund has denied that it received the money. The Fund’s management said the contractors have even issued a warning to abandon the project for defaulting payments.
This irregular transfer of the project from Utalii College to Tourism Fund was done by CS Balala through a gazette notice dated April 9, 2010 who was, by then, still serving as Tourism minister.
Although investigations show payments amounting to over Sh3 billion may have been released from the Treasury to be paid to the contractor and consultants, records at Tourism Fund show that only about Sh1.2 billion was received.
Preliminary investigation findings revealed how the government paid contractors money they never asked for and jobs not done.
For instance, there is a consultant who charged a total of Sh556.8 million but was paid Sh817.9million. In other words, Sh261.1 million was money the consultant never asked for but was paid nonetheless.
A case in point is 2014/2015 financial year when the Treasury released to Ministry of Tourism Sh811.4 million for Ronald Ngala Utalii project.
The ministry in turn only released Sh311.4 million to the Fund and insisted it would pay the remainder directly to the contractors yet there existed no contract between the ministry and the said contractors.
The chronology of this project, which may easily turn out to be a white elephant, was subject of a Cabinet meeting held on September 13, 2007. The Cabinet directed that the Kenya Utalii College Coast branch which was later named Ronald Ngala Utalii college coast branch be established.
The then Cabinet Secretary for Finance, Henry Rotich was directed to avail the necessary funds totaling Sh1.94billion for the project.
The college, which was legally domiciled at Utalii College, was part of a strategic expansion programme of the school.
It was for this reason that Cabinet directed the Finance Ministry to fund Utalii to facilitate the expansion programme.
However, the Treasury’s first disbursement to Utalii was Sh43 million. Senior official in the Ministry of Tourism said the amount was too little to roll out the project and the college resolved to await the next allocation.
However, before the next allocation was done, the ministry accused Utalii of not implementing the project and a scheme to take away the same from the college started in earnest.
During this period, senior officers in the ministry said there was a heated discussion between the college and the ministry with the latter insisting the project must be moved against the decision of the Cabinet.
Eacc sleuths are keen to unravel the reason that informed the need another branch of Utalii and how it was moved from the college to Catering and Tourism Development Levy Trust.
On December 2009, the office of the Head of Public Service wrote to the then Permanent Secretary directing that the ministry to liaise with the office of the Attorney General in regard to the establishment of Ronald Ngara Utalii College and warned that the manner in which the ministry wanted to establish the college was illegal.
The Attorney General’s advice to the Ministry of Tourism. ” We refer to your letter Ref no. OP/CAB.1/18A and dated November 3rd, 2009. We have perused the copy of the letter Ref. MT.A/4/5/3 and dated November 26th, 2009, and the attached draft legal notice to establish a training institution that is body corporate under section 29 (1) of the hotels and restaurant act (Cap 494). We would like to advice you that establishment of the institution by the minister under section 29 (1) of the Act would be inconsistent with the Act.”
However, despite this advice, Balala went ahead to gazette the establishment of the college against the law.
The reason given for this illegality was that ‘funds provided for this project were likely to go back to the Treasury.’ This explanation is contained in a letter sent to Tourism Fund former Chief executive Allan Chenane by then tourism acting Permanent Secretary Eunice Miima.
On November 23, 2012, CDLT advertised the contract for establishment of Ronald Ngala Utalii college Coast branch.
The tender was awarded to M/S Mulji Devraj and Bros vide tender committee meeting No TG/6/2013-13 held on April 11, 2013 at a contract sum of Sh8.9 billion.
The audit report equally says the award of the contract was fraudulent because, “M/S Mulji Devraj & Bros was the third lowest (Sh8, 961,370,998.00) bidder, being Sh627, 615,756 above the lowest bidder at a bid price of Sh8, 333, 755, 242, 00…there was no justifiable reasons to have exposed the public money to risk of incurring a loss of approximately Sh627 million by awarding the third lowest bidder,” reads part of the report.
The consultancy aspect of the contract was awarded to Baseline Architect Ltd at a cost of Sh556.8 million and Unjenzi consultants (Quantity Surveyors) at a cost of Sh402 million and an additional Sh61.4 million interest on overdue accounts.
In what could well be described as managed fraud, the report says, “Notwithstanding over-design of the project, circumvention of the financial management laws and regulations, diversion from the project approved by the Cabinet among others, the following enumerated payments made to both the consultants and the contractors appear ineligible.”
There are also instances where the Ministry of Tourism refused to transfer all the money for the project as released by the Treasury to the Fund for payment of contractors.
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