A court has allowed the Ethics and Anti-Corruption Commission (EACC) to recover Sh26.4 million illegally obtained from Kilifi County Government by a medical supplies company.
The High Court has found that the money was illegally paid to Mediscope Agencies in 2016, in an irregularly awarded tender for supply of 6,000 insecticide-treated mosquito nets.
Mediscope shared the money with Serah Musyimi and David Kisoi, who was trading as Dankies Agencies. A county employee, identified as Alex Mwongela, received a share of Sh400,000 from the proprietor of Mediscope Stephen Barawah, according to a judgment by Justice Esther Maina.
Mr Barawah sent a portion of the cash to his other company, Barawah Limited, court documents show.
"There is evidence that the payment made to the first defendant (Mediscope Agencies) was distributed to the defendants. Their bank statements were tendered in evidence, and that fact was proved on a balance of probabilities. Having found that the payments made to Mediscope were irregular and unlawful, it goes without saying that the defendants were unjustly enriched by the payment of that sum," Justice Maina ruled.
The court allowed the EACC to recover the money from the defendants, with Mr Mwongela's liability being limited to Sh400,000. The court also allowed EACC to freeze the bank accounts of the beneficiaries.
"This court having found that there were unlawful payments to the first defendant (Mediscope Agencies) and that there was unjust enrichment to the defendants, I find that they are jointly and severally liable to the county government of Kilifi through the plaintiff (EACC), for those sums," said Justice Maina.
The judge also found that procurement was irregular as there was no budget, and it was not clear therefore how Mediscope won the tender, a position strengthened by prosecution witnesses.
“A flawed procurement process can never give rise to a lawful award and contract. In this case, it is not clear how Mediscope was selected to supply the insecticide-treated mosquito nets. In the first instance, he claimed to have been a pre-qualified supplier/contractor for medical suppliers, but he did not have any evidence to prove it,” said Justice Maina.
“Secondly, he claimed this was a restricted tender; that he was merely called on phone by the procurement department to pick a bid document. Later, he stated that he received a letter to bid, but the letter he referred to was a general letter”.
The court ruled that the tender awarded to the supplier neither met the requirements nor the conditions set in law -Public Procurement and Asset Disposal Act- for a restricted tender nor a direct tender.
The recovery order followed an investigation by EACC that revealed the supplier and the county government employees had jointly facilitated and willfully participated in a corrupt enterprise to fraudulently acquire public funds. EACC filed the recovery suit in 2018.
The commission received a report that several payments that were not budgeted for had been made by the county government. Investigations established that Stephen Barawah trading as Mediscope Agencies was paid Sh8.8 million in three tranches totaling to Sh26.4 million for the supply of mosquito nets.
EACC argued that the procurement process was marred with irregularities and failed to comply with the Public Procurement and Asset Disposal Act, 2015, and that the alleged contract between the county government and Mediscope was illegal.
The commission further argued that there was no budget in place for the procurement of the mosquito nets, and the payments were “below the line transactions".
Among key witnesses availed in court by EACC was Keziah Wangui, an internal auditor who conducted a special audit at the request of the county government’s Chief Finance Officer Benjamin Kaai.
She investigated several vouchers, particularly one for Sh8,820,000 payment to Mediscope Agencies, and discovered three such payments made using the same Local Purchase Order (LPO) number.
Two payments were cancelled in the Integrated Financial Management Information System (IFMIS) but still processed through the Central Bank of Kenya (CBK) Internet Banking System, she testified.
She stated that only one payment voucher was available and properly documented, and that the other two lacked supporting documents.
Her report also flagged “below-the-line transactions” payments made without corresponding budget votes.
Ms Wangui testified that she recommended a forensic audit, which she said was never done. In cross-examination by the lawyers, she stated that she could not confirm the physical delivery of the mosquito nets.
The court heard that the audit relied purely on available documents, and no physical stock verification was done.
According to the witness, the delivery note and invoice were dated before the LPO issuance, which raised doubts.
In defence, Mediscope proprietor Stephen Barawah and the sole director of Barawah Limited testified that the procurement method used in regard to the supply of the nets was restricted.
He testified that he received a call, from a person that he did not name, asking him to tender for the supply of the mosquito nets. He said that he was a prequalified supplier and that when he put in his bid, he received another call informing him that he had won the tender.
The court heard that, according to the officers of the county government, there was an emergency due to a malaria epidemic, and that justified the use of the restricted method of procurement.
Mr Barawah testified that he accepted the award by signing an LPO after which he supplied the nets and was paid for the same.
