Sh500million procurement fraud claims rock KDC
The Kenya Development Corporation (KDC) is facing an investigation involving procurement audit of nearly fifty flagged tenders by the Public Procurement Regulatory Authority (PPRA) over suspected tendering malpractices that border procurement fraud of specified contracts amounting to Sh0.5billion, investigations by The Informer Media Group have established.
PPRA has twice written to KDC Director General Norah Buyaki Ratemo requesting tender awards, evaluation reports and advertisements of the tenders in question following a damning whistleblowing alleging an intricate web of tender fraud at KDC.
The procurement watchdog further indicated compliance officers may visit KDC’s offices and are “authorised to inspect, peruse and carry any documents that may assists in the audit.”
KDC leadership is accused of allegedly violating procurement laws by failing to publish key contracts, raising concerns of possible fraud and deliberate opacity in its multi-million-shilling tendering processes.
It is alleged that KDC did not disclose several contracts, some running into hundreds of millions of shillings as required under the Public Procurement and Asset Disposal Act (PPADA), which mandates all procuring entities to make tender awards, contract details, and implementation updates publicly accessible. It is alleged that the failure to publish may have concealed irregularly awarded contracts, inflated costs, or conflicts of interest.
“We have further received a letter dated September 25, 2025 from concerned citizens alleging procurement irregularities…In view of the above and pursuant to the provisions of Section 43 (1) of the Public Procurement and Disposal Act, 2015, the authority has instituted a performance audit of the above contracts.” PPRA DG Patrick Wanjuki told Ratemo through a correspondence Ref. PPRA/5/40/PDC/VOL.XXI (4) dated November 10, 2025.
This is the second correspondence from PPRA to KDC involving the matter following an initial communication vide Ref. PPRA/5/40/PDC/VOL. XIX (342) dated October 8, 2025.
“To facilitate the audit, you are required to ensure that all the contracts plus relevant supporting documents for each contracts have been uploaded in the Public Procurement Information Portal (PPIP) as required by PPRA Circular No. 04/2022 and PPRA Circular No. 05/2022,” the letter adds in part.
According to sources familiar with the ongoing probe, a number of tenders under audit appear to have bypassed open competitive bidding, with some awarded through restricted processes that lacked justification. Internal documents reportedly show inconsistencies between approved budgets and the amounts paid to select suppliers, raising red flags about possible collusion between procurement officers and politically connected contractors.
The correspondence from PPRA to Ratemo is also copied to the Ethics and Anti-Corruption Commission (Eacc).
Some of the tenders involve provision of medical insurance services for KDC Board of Directors and staff valued at Sh35million, proposed overhaul and modernisation of wet areas Utalii Househ26.4million) and provision of general insurance services (Sh13million).
Others include installation of lifts at Finance House at a cost of Sh64million, Utalii House CCTV installation (Sh33million) and fencing and securing of KNTB plot (Hilton) at a cost of Sh11.4million among others.
When contacted for comment, Ratemo responded via a short text message saying, “thank you for reaching out, our communications team will be in touch,” she wrote back.
Among the key documents that PPRA has instructed be uploaded on PPIP include; procurement plan financial years audit, user requisitions, tender invitation notices, appointment to tender opening committees, registers, evaluation reports, blank tender documents issued to bidders, award notices and contracts among others.
The alleged scandals comes months after the Auditor General Nancy Gathungu revealed in January this year that KDC is sinking into a Sh33.44billion hole of accumulated bad debts as Kenyans fail to repay loans.
The report revealed that KDC is increasingly failing to recover loans advanced to Kenyans and this has threatened to paralyse its operations.
“The respective loan records indicated that approximately Sh33.44 billion or 86 per cent of the corporation’s total loans portfolio estimated at Sh39.06 billion as at June 30, 2023, was considered by management as non-recoverable,” the report states.
In the report that covered the financial year ending June 2023, the corporation has stopped accrual of interest on the loans denying itself the much-needed funds in line with the set rules.
The rule requires that interest accrued should not exceed the principal amount outstanding when the loan becomes non-performing.
In addition, the securities-related to some of the old non-performing loans being borrowers’ ancestral lands, were reported to be missing, impaired or irredeemable.
“The board of directors has approved the full provision for the losses totalling Sh33.44 billion against the corporation’s reserves as required by International Financial Reporting Standard No 9,” the report says.
The high ratio of non-performing loans portfolio, Gathungu said, indicates the corporation is unable to recover money owed by its customers.
