Italian firm sues Kenya for Sh80b in dams scandal

Wednesday, November 24th, 2021 00:29 |
Former Treasury Cabinet Secretary Henry Rotich. PD/FILE

An Italian company contracted to build the controversial Kimwarer and Arror dams has sued the Kenya government at an international court demanding Sh80 billion compensation.

Director of Public Prosecutions (DPP) told a Nairobi court yesterday that Italian contractor CMC Di Ravena Itinera Joint Venture, had moved to the International Court of Arbitration at The Hague even though no work was done on the ground.

In an opening statement in the trial of former Treasury Cabinet Secretary (CS) Henry Rotich and eight others, special prosecution counsel Taib Ali Taib, told the court that he will prove that former minister Rotich and other accused persons had a hand in the looting of Sh65 billion meant for construction of the dams.

The Prosecution said that despite the projects having been earmarked to cost Sh65 billion, the contractor was demanding the original figure plus interest and other penalties, bringing the total amount to Sh80 billion.

Ghost identity

Rotich and eight others were charged afresh on November 1, in the Sh65 billion Kimwarer and Arror dams’ case, after it was consolidated with the case against former Kerio Valley Development Authority boss David Kimosop.

Other accused persons are; Treasury officials Kennedy Nyachiro (Chief Economist), Jackson Kinyanjui (Head of Europe division) and Titus Muriithi (Director of Resource Mobilisation at Treasury). 

Nairobi Chief Magistrate Lawrence Mugambi heard that CMC Di Ravenna Itinera Joint Venture,, filed a case before the Hague-based court to compel the Government of Kenya to make the payment.

The court heard that the government risks losing Sh80 billion although the value of the project was placed at Sh65 billion.

The prosecutor stated that the contractor is seeking the Sh80 billion even though no dams exist on the ground.

“At the time agreements were signed to pay them the planned billions of shillings, they were not even registered and did not exist in law at the time,” Taib noted.

He added: “The Prosecution will prove to court that CMC Di Ravenna Itinera Joint Venture actually never brought or acquired any tender documents. They did not submit any bidding tender document for the construction of the two dams. CMC Di Ravenna Itinera Joint Venture was not one of the companies forming record at the opening of the tenders.”

Taib informed the court that the CS only approved construction of one dam; Arror. That he did not approve construction of Kimwarer.

It is the Prosecution’s case that the said company was a ghost entity that had never participated in the tendering process.

“We will show you by way of evidence that the accused persons, conspired to award the tenders in question to the company known as CMC Di Ravenna Itinera Joint Venture, even though that company did not exist at the time they were awarded the tenders,” Taib told the court.

Taib added: “They never bought any tender documents. They had never lodged any bid. They were absent at the tender opening. They were not evaluated in any way. They were not recommended by the tender committee for any award.” 

The lawyer further claimed that though Rotich approved construction of one dam, Arror, the accused persons conspired to float a tender for both projects in breach of all laws relating to procurement.

“We will demonstrate to the court that the original tenderer was CMC Di Ravenna of Italy, not CMC Di Ravenna Itinera Joint Venture. Despite the tenderer being CMC Di Ravenna, a new firm was inserted as a joint venture alongside Aecom of South Africa. The joint venture was included illegally with impunity,” said Taib.

The court heard that the letter of award of the two projects was not issued to CMC Di Ravenna or Aecom of South Africa but to a new company, CMC Di Ravenna of South Africa.

Taib said that the prosecution will produce evidence to prove beyond reasonable doubt that the former Treasury CS acted outside the law and conspired with his co-accused to defraud the government using the project for purposes of self-enrichment.

It is the prosecution’s case that Rotich also secured loans without any competitive process, against interest of the Republic of Kenya, at a high interest and on terms that were prohibitive and not in the interest of the country.

Caused uproar

“We wish to show how the former CS breached the law and secured loans for KVDA to construct the dams, even though he had no legal authority to secure any loan for State corporations. He only had the authority to secure loans in regard to Central government, which was not involved in this case,” Taib said.

Taib said that Rotich bought and paid more than Sh8 billion for an insurance cover, that took care of the interest of the Italian contractor and not the Government of Kenya.

“He did so without following the procurement process. He proceeded to take the loans from four Italian banks under two agreements, which he disguised as government-to-government yet they were not,” said Taib.

The court heard the Italian government never signed or negotiated the agreements and neither of its entities, signed those agreements on its behalf and that Rotich breached the law by not bringing the proceeds of the loans to the Consolidated Fund account of the Government of Kenya.

“The money has been disbursed from Italy to an account in the United Kingdom without involvement of Kenya and later transferred to the Italian contractor without passing through the Consolidated Fund in Kenya as required by law,” said Taib.

The court further heard that the tendering process of the two projects started without the financial budget or Parliament approval.

Taib said that Rotich and his co-accused acted with impunity by disregarding all procurement laws. 

At the height of the controversy, Deputy President William Ruto while apparently defending Rotich, caused uproar when he claimed that the Kenya government had lost “only Sh7 billion”.

“You have heard that government has lost about Sh21 billion in Kimwarer and Arror dams, which is a flat lie! The money in question is about Sh7 billion and for every coin that has been paid, we have a bank guarantee. No money will be lost because we are a responsible government,” Ruto had said then.

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