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Economy

Banks come calling on Kitui contractors as County faces graft probe

A man points to the site of the proposed Thwake Dam at the border of Kitui and Makueni Counties: Equity Bank and KCB confirmed that they had stopped LPO financing from the Kitui County due to rising cases of default. FILE PHOTO | KITAVI MUTUA | NMG
A man points to the site of the proposed Thwake Dam on the border of Kitui and Makueni Counties: Equity Bank and KCB confirmed they had stopped LPO financing to Kitui County due to rising cases of default. FILE PHOTO | KITAVI MUTUA | NMG  

Contractors affected by ongoing graft investigations into the tendering mess in Kitui County are facing hard times as commercial banks and auctioneers loom in the wake of difficulties in repaying loans.

Most of the merchants, who borrowed from commercial lenders to implement infrastructure deals to the tune of Sh1.3 billion, say they are unable to service loans as some of the projects are now subject to investigations by the Ethics and Anti-Corruption Commission (EACC).

Last month, EACC detectives looking into procurement irregularities raided several county offices and carted away heaps of documents into two pickup trucks.

The agency wants the county government to explain why 89 contracts amounting to millions of shillings were not subjected to competitive tendering processes as per procurement laws.

The wide-scale corruption inquiry means it may take several weeks for the sleuths to conclude investigations which may lead to delay or recommendations that the county cancels some of the payments.

Consequently, payments for jobs - including 89 questionable Local Service Orders (LSOs) - cannot be processed until investigations are concluded, leaving many contractors worried that their assets may be auctioned by commercial lenders if they cannot meet their obligations.

“Most of us are in deep trouble with banks and could be auctioned anytime. It’s unfortunate that we are suffering for the mistakes of corrupt officials who deliberately chose to compromise laws and procedures” said a supplier who spoke to Business Daily on condition of anonymity.

Credit managers with Equity Bank #ticker:EQTY and the Kenya Commercial Bank (KCB) #ticker:KCB confirmed that they had stopped LPO financing from the county due to rising cases of default.

Appeal for calm

Acting county secretary Alex Kimanzi has urged the affected suppliers to remain calm while cautioning politicians not to take advantage of their disgruntlement to fuel propaganda.

While confirming that 89 LSOs relating to development projects had been flagged for improper procurement procedures, Mr Kimanzi urged affected contractors to remain calm while cautioning politicians not to take advantage of their disgruntlement to fuel propaganda.

“We ask all affected contractors and the public to bear with us as we seek to resolve this issue at the earliest time possible,” he said in a statement.

The seized documents touch on restricted tenders for various water and road works projects done by the county's ministry of infrastructure and urban development for the 2015/2016 financial year.

According to a letter dated February 24th, the EACC has demanded a long list of other documents to help ascertain if the projects in question were actually done or if there was a scheme to siphon public funds.

The anti-graft agency wants to examine the entire procurement process and has demanded 23 sets of accounting data including works inspection reports, certificates indicating works done, payment vouchers and the county government bank statements as from June 1st 2014 to February 17th 2017.

The county secretary is also required to provide bank account details for the companies alleged to have carried the projects under investigation, approval for the use of restricted tendering method and all bid documents submitted by the bidders.

Several senior county officials from Treasury, Works and procurement departments who are alleged to have awarded themselves some of the jobs have since recorded statements with EACC.

Locked out of elections

Last month, EACC proposed that governors, county officials and members of county assemblies (MCAs) who have graft-related cases in court should be locked out of this year’s polls.

The agency is also compiling a list of those facing charges as well as those under investigation as it looks to deny them clearance.

“So as to stop the misuse and rampant wastage of billions of shillings given to counties, we will go for those who have enriched themselves using taxpayers’ resources. They will be taken to court and those hoping to vie barred from getting clearance for nomination,” EACC chief executive of operations Michael Mubea said.

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