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Economy

Central Bank deal with UK security firm suffers hitch

Central Bank governor Njuguna Ndung’u. FILE PHOTO | NATION MEDIA GROUP
Central Bank of Kenya governor Njuguna Ndung’u. FILE PHOTO | NATION MEDIA GROUP 

Central Bank of Kenya Governor Njuguna Ndung’u was Tuesday pulled back into a long running procurement dispute after the corruption watchdog appealed a High Court decision that discharged him of alleged misconduct in the award of a Sh1.2 billion security tender to a UK firm.

The Ethics and Anti-Corruption Commission (EACC) wants the Court of Appeal to block award of the tender to Horsebridge Networks, pending its investigations into claims of irregularities in the deal.

Prof Ndung’u found himself at the centre of the procurement battle following claims that he directed the CBK’s procurement board committee to ensure Horsebridge got the tender.

The governor is also under the spotlight over inflation of the tender price from Sh800 million to Sh1.2 billion.

“CBK had only budgeted Sh800 million, but the tender awarded is for Sh1.2 billion which confirms that the entire procurement process was tainted with illegality,” the EACC said.

The corruption watchdog’s appeal Tuesday faced vigorous opposition from the CBK and the UK firm who argued that they had signed the contract and the 30 days that the High Court granted had lapsed before the appeal was filed.

The CBK says in court documents that it signed the contract with Horsebridge on October 31, rendering EACC’s appeal too late for determination.

The two parties say in their responses that the appeal had been overtaken by events and cancelling the contract would be against public interest.

“Installation of the system is of great national importance because the CBK is the custodian of the national currency. The public is likely to lose money should there be inadequate security at the installations around the country where the system ought to have been installed,” said the CBK.

The bank insists that the anti-corruption agency has not provided any evidence of the irregularities it claims were plentiful in the procurement process.

“EACC’s intended appeal raises no legitimate point deserving determination since it failed to show the High Court the alleged irregularity. It cannot now purport to have an arguable appeal, having had the opportunity in the High Court.”

CBK has also defended inflation of the tender cost by over Sh400 million, arguing that the initial Sh800 million budgeted for the project was only an estimate.

“The Sh800 million complained of was an estimate cost. EACC is concealing material facts by failing to accurately present to this court that Horsebridge was the lowest evaluated bidder,” Cassian Nyanjwa, a CBK director says in documents before court.

Mr Nyanjwa added that the EACC had no jurisdiction in a contractual matter such as the tender award to Horsebridge because it was not party to the security tender.

Horsebridge has accused the anti-corruption body of acting at the behest of the losing bidders, whom it says are trying to frustrate the deal it has with the CBK.

It wants the appeal thrown out, arguing that EACC has not given any proof of the allegations of irregularity in the procurement.

“EACC commenced the so-called investigations at the behest of the losing bidders to the subject tender. Other than preferring an appeal of the decision, the losing bidders have instead approached EACC to scuttle the concluded procurement process,” said Horsebridge.

High Court judge Weldon Korir in September cleared the contract that the CBK awarded Horsebridge despite EACC’s argument that it was investigating alleged irregularities.

The court ordered the CBK to award Horsebridge the contract within 30 days of the judgment, arguing that none of the other bidders had questioned the award to the UK firm.

Justice Korir made the decision after hearing Horsebridge’s petition that sought to have the CBK compelled to award it the contract.

The IT firm had paid a Sh121 million performance bond as part of the requirements for award of the tender.

EACC’s investigations into the procurement deal led the Director of Prosecutions Keriako Tobiko to issue a warrant of arrest for Prof Ndung’u but the CBK governor obtained court orders stopping his arrest.

Mr Tobiko accused Prof Ndung’u of influencing the award of the tender to Horsebridge, and gave the green-light for the arrest and prosecution of the CBK governor for abuse of office. Prof Ndung’u got orders blocking his arrest until a petition he filed against the impending apprehension is determined.

The matter is still pending before Justice George Odunga in the High Court.

Justice Korir’s decision had come as big relief for Prof Ndung’u who faced the prospect of becoming yet another CBK governor to leave office in disgrace. If arrested and charged with abuse of office, he would stand suspended on half salary until the matter is decided.

CBK tried to terminate the tender in 2012, after it got wind of the investigations by EACC, but Horsebridge moved to the procurement review tribunal which directed the CBK to continue with the deal.

Horsebridge went to court seeking compelling orders after the CBK declined to award the contract early this year.

Other firms that took part in the procurement process were AUA Industrial, ORAD Limited, Azicon Kenya Limited and Engineered Systems Solutions.

Only Horsebridge and Orad made it to the final evaluation stage. Horsebridge’s Sh1.2 billion bid was Sh300 million lower than Orad’s, securing it the tender.

During the High Court proceedings the anti-graft body had asked Justice Korir to grant it 45 days to conclude its investigations or submit the progress it had made.

The judge noted during his judgment that the anti-graft body had not submitted any report to the court after the time it had requested lapsed.

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