National Housing Corporation managing director Wachira Njuguna. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
NHC had spent Sh14 million on another ICT system in December 2012, and therefore did not need a new one, according to the audit report.
An audit report that led to suspension of the National Housing Corporation managing director Wachira Njuguna says the parastatal paid Sh130 million for an ICT platform it did not need.
Sh52.5 million of this amount was paid up-front, auditors found.
The audit done by the office of the Inspector General for Corporations (IGC) raises serious reservations on the execution of the Enterprise Resource Planning (ERP) project that was contentiously cited by Lands Cabinet secretary Charity Ngilu as the basis for Mr Njuguna’s dismissal. It emerged in the audit that NHC neither needed the new system nor did it have the capacity to host it.
“The payment amounting to Sh52.49 million for ERP SAP software and implementation was made in the backdrop of no appropriate hardware to house the said software. It is therefore not clear why the ERP system was introduced in the first place if the infrastructure could not support it,” said the IGC audit report.
According to the audit report, on December 10, 2012 some 27 firms bought tender documents but only eight submitted bids. The evaluation committee recommended to the tender committee to award the tender to Twenty Third Century Systems for their lowest bid of $1.048 million (Sh90.937 million).
The process was, however, rejected by the tender committee on grounds that the evaluation committee was among other things not objective as well as incapacitated and that the three reports submitted on the winning tender were inconsistent.
A second process was initiated on May 16, last year, with Seven Seas Technologies Group finally getting the tender award. The audit found that both firms were owned by the same proprietors.
ERP had not been properly and adequately cost such that nobody in NHC knew what it was going to cost. Seven Seas quoted Sh129.748 million, which was roughly equivalent to the budgeted amount for the project at Sh130 million.
Payment terms showed that 30 per cent of the total amount was payable upfront upon the execution of the contract — before any work was done and before mobilisation of any equipment. NHC had spent Sh14 million on another ICT system in December 2012, and therefore did not need a new one, according to the audit report.
The suspension of Mr Njuguna has, however, been fraught with counter accusations, with the suspended MD saying that his ouster was plotted by people seeking financial benefits.
He has since suspension refuted allegations of impropriety, adding he turned around the corporation, it remitted its highest ever dividend of Sh57 million to the Treasury. He also claimed he was not given an opportunity to defend himself against charges raised by the audit.
