World Bank, AfDB blacklist nearly 20 Kenya firms over fraud


An atrium is seen at the World Bank headquarters building in Washington, US. PHOTO | REUTERS

Nearly 20 Kenya-based companies have been blacklisted by the World Bank and the African Development Bank (AfDB) in less than two years over fraud and quality concerns in projects funded by the multilateral lenders.

Nairobi-based consultancy firm Africa Development Professional Group (ADP) is the latest firm with Kenyan links to join the financiers’ blacklist after the World Bank banned it for alleged fraud.

The World Bank said last week an investigation conducted by its corruption-fighting unit had established that ADP had engaged in fraudulent practices during a bank-funded project in Somalia.

“According to the facts of the case, ADP recklessly omitted the disclosure of a conflict-of-interest relationship when submitting a proposal for a contract under the project, which is a fraudulent practice,” said the World Bank.

ADP and its affiliates have been debarred for 21 months and will be ineligible to participate in any World Bank-financed projects during the period.

ADP says that it provides “consultancy and advisory services on management, investments, business solutions, corporate finance and business development".

The firm also says it has undertaken several multi-million shilling projects for government agencies.

Several other Kenyan firms have been banned by the AfDB in recent months, turning the spotlight on how local firms bid and clinch lucrative tenders with the two multilateral lenders.

A spot check on the AfDB website shows some of the recently banned companies by AfDB based in Kenya include Aerospace Aviation, Beta Trading Company, Global Interjapan (Kenya) Limited, Eva-Top Agencies, Madujey Global Services, Mactebac Contractors Limited, Techno Brain (Kenya) Limited ("Techno Brain Kenya"), and Sony Commercial Agencies.

Others are inotec Co. Limited (Kenya Branch Office), Sino-Kenya Engineering Group Company Limited, Rockey Africa Limited, Reef Building Systems Limited (Reef), Ultimate Engineering Limited, Express Automation Limited and Kenya Power contractor Chint Electric.

Two individuals Mr Yuehua Bai and Mr. Joram Opala Otieno (also Known as Mr. Joram Opala) are also on the list.

Arising from the huge number of Kenyan firms that have been blacklisted, the AfDB recently revealed plans to hire quality assurance experts to enable greater transparency and oversight of its funded projects.

Under a new regime, Kenyan firms bidding for the multi-billion shilling projects funded by the AfDB are set to face more scrutiny as the lender moves to seal graft loopholes.

"Bank’s portfolio in the region is facing a number of challenges and requires close monitoring," said AfDB in an internal document seen by the Business Daily.

"…The consultant will participate in country/regional meetings to review project and portfolio-related reports, including but not limited to project concept notes, project appraisal reports, project completion reports, country portfolio performance reviews reports."

The bank said the consultants will also review and edit operations, strategy, and policy-related proposals to ensure "alignment with bank strategy objectives, quality standards, readiness and compliance with bank policies."

As part of its efforts to improve its cooperation with anti-corruption and law enforcement agencies, AfDB’s Office of Integrity and Anti-Corruption (PIAC) last year negotiated and signed a memorandum of understanding (MoUs) with the Kenyan Ethics and Anti-Corruption Commission (EACC).

"The MoU will serve as framework for collaboration on corruption prevention, training and information sharing," said AfDB then.

AfDB’s recent move to engage consultants is seen as meant to enable the bank have a tight leash on projects it finances.

"(They will) assist in the identification of problems related to the bank's portfolio performance and service delivery, and promptly undertake appropriate action."

A ban from the AfDB over fraud concerns may attract similar actions from other multilateral development banks, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the World Bank.

The financial institutions, which are mostly owned and financed by governments, have been keen to curb corruption in their projects, which run into billions of dollars annually.