Portland directors put on the spot over Sh1bn tender deals

The ousted directors have previously blamed their removal from office on a multi-billion shilling tender that the government wanted swayed in favour of a local supplier.

They said that the award of the kiln upgrade contract to South Korean firm, Posco Plantec, in late November had upset government officials who wanted the tender given to construction firm H Young for Sh3.8 billion.

EAPCC’s directors settled on Posco Plantec on the strength of its financial bid of Sh1.8 billion. H Young, however, had a superior technical bid.

The government on Thursday disclosed for the first time some of the reasons why it sacked the directors of East African Portland Cement Company (EAPCC), saying it could not reveal more without jeopardising a forensic audit currently under way.

Court papers filed at the start of a case in which the directors are seeking to be reinstated alleged that the board spent Sh1 billion on goods without following competitive bidding and, in another instance, overruled the tender committee to vary the terms of a clinker contract.

Also read AG shocks state with legal opinion on EAPCC control

Restricted tendering

“Those purchases were made by direct procurement or restricted tendering,” an affidavit by acting Industrialisation minister Amason Kingi said. “These processes were not authorised by the Public Procurement Oversight Authority.”

According to the affidavit, the irregular purchases were made between August 15 and November 30, 2011.

Mr Kingi said that the Kenya National Audit Office had raised a query over the expenditure of Sh13 million which was overpaid to the chairman, Mark ole Karbolo, and the suspended directors.

The affidavit also said that the board which was sacked on December 22 changed the terms of a contract to supply 140,000 tonnes of clinker after the supplier — Sanghi Industrial — requested to increase the price from $58.90 per tonne after supplying only 67,000 tonnes.

After the company’s tender committee rejected the increase, the board granted the variation which ended up costing the company Sh74 million.

“The suspended board overruled the tender committee and awarded a price increase for the delivered products as well as for further products to be delivered,” Mr Kingi said.

According to him, a legal opinion by Attorney-General Githu Muigai on whether EAPCC was a parastatal or not was “inconclusive”.

The AG had advised Industrialisation permanent secretary Karanja Kibicho that the Treasury and the National Social Security Fund should merge their stakes for the cement firm to be controlled by the state.

Mr Karbolo and three other directors — Titus Naikuni, Hamish Keith and chief executive Kephar Tande — are seeking to reverse the minister’s decision, arguing that EAPCC is not a state-controlled company.

But a lawyer speaking on conditionof anonymity faulted the AG’s opinion, arguing that the State controls a combined 52 per cent stake in the cement firm.

“The government holds majority stakes in parastatals through various entities.