The Pan African Paper Mills in Webuye town. PHOTO | FILE
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MPs have concurred with Auditor-General Edward Ouko’s assessment that money sunk in the Webuye-based paper mill “was a waste of public resources as partly demonstrated by the audit query.”
Taxpayers lost Sh1 billion that the government used to revamp Pan-Paper Mills before it was sold for Sh900 million, a parliamentary committee has said.
Parliament’s Public Accounts Committee (PAC) has concurred with Auditor-General Edward Ouko’s assessment that money sunk in the Webuye-based paper mill “was a waste of public resources as partly demonstrated by the audit query.”
“The company has now been sold off for Sh900 million, way below its valuation,” Nicholas Gumbo, who chairs PAC, said in a report to the House.
In April this year, the billionaire Rai family announced that it had bought the collapsed mill for Sh900 million, paving the way for reopening the factory which closed shop in 2009.
Jaswant Rai, the chairman of the business group, told the Business Daily that they had acquired the company and would revive it within the next few months. The family announced then that it would pump Sh6 billion into the mill over a five to 10 year period.
In 2010, then President Mwai Kibaki held a colourful ceremony in Webuye during which he switched on factory machines to signify revival.
But the factory was shut down shortly after even though the government had pumped in Sh1.2 billion to revive it and pay off lenders who had placed it under receivership.
Mr Ouko questioned the value to taxpayers of the Sh1 billion used to revive the factory before it was shut down and subsequently sold below its valuation.
PAC has also recommended the immediate prosecution of top officials in the Industrialisation ministry who orchestrated the loss of Sh6.4 million during the mill’s revival in 2010.
The committee wants Director of Public Prosecutions Keriako Tobiko to charge officials who fraudulently approved payments to a wrong company instead of a firm that supplied 20,000 kilos of production material to Pan Paper.
Mr Ouko said during the 2011/2012 financial year, the ministry contracted a vendor to supply 32,160kg of production materials — polymer (Aquafloc 10 1085) to Pan Paper Mills Ltd at a cost of Sh10,296,346. On March 19, 2012, the vendor supplied and delivered 20,000kg of the material valued at Sh6.4 million and invoiced the ministry accordingly on March 12, 2012 and subsequently, the payment was processed on May 28, 2012.
But the ministry transferred the money through its Central Bank of Kenya account to another company through a Barclays Bank account.
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