Kenya got Sh16bn loan for Arror, Kimwarer dams during fraud probe


Ex-Treasury CS Henry Rotich. FILE PHOTO | NMG

Kenya received Sh16.2 billion from Italian bank Intesa San Paolo for the construction of Arror and Kimwarer dams in a period when investigations into the misuse of funds in the project were ongoing.

The Treasury’s public debt registry shows that the Italian bank wired the billions in the year starting July 2019, just days after former Treasury Cabinet Secretary Henry Rotich was arrested on suspicion of financial misconduct related to the construction of the two dams.

This suggests that the arrests or ongoing probe of a suspect loan deal to finance the construction of Arror and Kimwarer dams did not stop Intesa San Paolo from releasing additional debt for the project.

The register shows that Kenya had received Sh3.4 billion ahead of July 2019 when reports of and investigations into the alleged financial misconduct linked to the construction of two dams were in the public domain.

In September 2019, President Uhuru Kenyatta cancelled the projects after receiving a report from a technical committee, which he had formed following the discovery of irregularities and improprieties surrounding the two mega infrastructure projects.

The cancellations came in a financial year when Arror dam received Sh11 billion while an additional Sh5.2 billion meant for Kimwarer was wired to Kenya. The Spanish firm was supposed to disburse a total of Sh74.3 billion (578.2 million Euros) repayable over 14 years beginning May 2021.

The Treasury did not reply to our request for comment on whether the loans were processed after the project was cancelled and whether they have begun making payments.

“Kimwarer Dam loan of Eur258,688,881.72 repayable in semiannual instalments commencing 9th May 2021 and ending on 9th November, 2035. Arror Dam -loan of Eur319,620,697.07 Repayable in semiannual instalments commencing 18th May 2021 and ending on 18th November, 2035,” the debt register says.

Prosecutors say Mr Rotich allegedly aided a Sh11 billion irregular offshore payment to an Italian insurance firm entangled in a suspect loan deal to finance the construction of Arror and Kimwarer dams, triggering concerns about kickbacks to officials involved in the projects.

Court filings by Director of Public Prosecutions Noordin Haji allege that Mr Rotich facilitated direct payment of the amount to Italy’s SACE Insurance contrary to the law, which requires that all payments are processed through the consolidated account in Kenya.

The State reckons that the push to bypass wiring the cash to the consolidated fund was engineered to facilitate bribes and kickbacks.

The government made advance payments of Sh19 billion, including the Sh11 billion in unnecessary debt insurance, which prosecutors say was shared out in accounts belonging to the conspirators and their agents.

Mr Rotich is accused of hiding behind government- to- government procurement to single source the privately owned SACE and craft an exorbitant Sh11 billion cover for the dams’ project, which had hardly taken off because designs had not been drawn while the Kenya Forest Service had declined to provide land. There were also concerns that the contractor CMC Di Ravenna- Itinera JV had gone bankrupt even after receiving Sh7.2 billion in advance pay for the project.

Evidence presented in court showed that CMC Di Ravenna- Itinera JV received Sh4.3 billion on September 27, 2018 as advance payment for Arror dam. For Kimwarer, an advanced payment of Sh3.5 billion was approved on July 2, 2018.

The payment in two tranches for both Kimwarer and Arror dams was made to a web of associated companies in Kenya, South Africa and Italy.