Full details of the case against CS Rotich over Kimwarer, Arror dams scandal

On 18^th September 2018, the Director of Criminal Investigations received complaints touching on governance and operation challenges in the management of the two dam projects (Arror and Kimwarer) that required urgent attention. Upon investigations by the DCI, it was established that the conception, procurement and payment process for the Arror and Kimwarer Dam projects in Elgeyo Marakwet County were riddled with massive illegalities. Having established this, the DCI and the DPP set up a joint team that conducted further in-depth investigations which revealed that several persons and legal entities committed criminal acts and omissions.

In late February 2019, the DPP received a preliminary investigation report and upon review, I (Noordi Haji) directed, on the 8^th of March 2019, that the breaches of the law disclosed, and their consequences were serious and merited a detailed and thorough investigation. I further directed that the joint team fast track the investigations and engage international partners.

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In June 2019 the DCI submitted the investigation file to the ODPP for direction.

The investigations established that government officials flouted all procurement rules and abused their oath of office to ensure the scheme went through. Many procurement procedures as stipulated by the law for such projects were ignored and the law was circumvented to ensure that CMC di Ravenna got the contract. KVDA chose Public Procurement and Disposal Act (PPDA), 2005 for the concession agreements despite the fact that the law in 2013 prescribed Public Private Partnerships (PPP). The officials who should have pointed this out failed to do so and went ahead to award the contracts to CMC De Ravenna of Italy to run concurrently while aware that the firm was, at the time of award, straining and getting into voluntary liquidation back in Italy. We also note that the same firm had been awarded three other mega dam projects that are either incomplete or are yet to commence.

KVDA management failed to comply with the principle of value for money which demands that there be competition amongst suppliers, efficiency and effectiveness in the procurement process, fairness and non-discrimination, integrity, transparency, and accountability. This was, in flagrant disregard to the laid down public procurement laws, regulations and rules resulting in massive loss of public resources.

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Whereas the alleged commercial contract signed between KVDA and CMC Di Ravenna/Itinera JV clearly states that Kimwarer Dam would cost USD 204,020,149.02 while Arror Dam would cost USD 252,188,732.27 totaling to USD 456,208,881 (approximately Kshs 46 Billion), the National Treasury negotiated a commercial facility increasing the amount to approximately Kshs. 63 Billion which is 17 Billion more than necessary or required payable on a timely basis without regard to performance or works. We now also know that CMC di Ravenna submitted draft technical designs in February 2019 four years behind schedule.

Further, the National Treasury entered into a facility contract in Euros while the commercial contracts were in USD therefore occasioning further loss to the Kenyan Government through exchange rates. Of note, out of the  Kshs 63 Billion in respect of the projects, as at January 2019, the government of Kenya has made the following payments: advance payment, commitment fee, insurance and other costs totaling Kshs 19,714,366,991. Out of this, Kshs 11 Billion for insurance was paid upfront. In contrast, if the borrowing was justified, a government guarantee would have sufficed at no cost to the Government of Kenya and Mwananchi. Further, Euros 40,031,927 (approximately Ksh 4.6 Billion) was borrowed in addition to the principle amount to pay interest in advance during the construction period which to date has not commenced. As a country, we continue to pay interest on the loan.

A further Kshs. 643 Million was released by the National Treasury as counterpart funds which was intended for the resettlement of the persons that would be affected by the said projects, as compensation for the land acquired. However, there is no evidence that land has been acquired four years down the line. Furthermore, Kenya Forest Service in a bid to protect our environment strongly opposed any excision of forest land pointing to significant adverse impact on the forest ecosystem.

Based on expert opinion, if this project was carried out in strict adherence to the law and existing Policies in place for safeguarding the public interest it should not have cost Kshs 63 Billion.

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The evidence established malpractices that impacted on our public debt a treasury report dated 3 march 2017 opined that, “if this borrowing is converted into Kshs at the prevailing rate of 106.2 it translated to a approximately a loan amount of 61 Billion. Added to the GoK total public debt stock of KSHs 3,983 Billion as at 27^th February 2017 debt stock increases to Ksh 4,043 billion equivalent to 52.9% in the Net Present Value of Debt to GDP which is above the limit of 50% provided for in section 26 (1) of the Public Finance Management Regulations.” This advice was ignored.  It is a high betrayal of public trust to disregard and breach public debt regulations. This kind of crime and irresponsibility enslaves us with unnecessary debt and mortgages our future generations.

The persons we are charging today were mandated with safeguarding our public interest and deliberately breached this trust and not only bound Kenya to a loan but they ensured that the funds did not come into the consolidated fund, in effect guaranteeing that no one was oversighting its use, they broke the law on Public finance Management. Under the guise of carrying out legitimate commercial transactions colossal amounts were unjustifiably and illegally paid out  through a well-choreographed scheme by government officers in collusion with private individuals and institutions.

Upon receiving and reviewing the evidence, I am satisfied there is sufficient evidence to charge and prosecute the perpetrators. It is instructive to note that the National Prosecution Policy requires the evidential test to be met before the public interest can be considered. Therefore, in applying the evidential test, one must consider all the evidence and information availed to the prosecutor, and in concluding that it is in the public interest to prosecute these cases, I have considered that such infractions are crimes against Mwananchi individually and collectively and the decision to prosecute is in line with safeguarding the public good. This decision has been made professionally, independently, devoid of any external influence, political consideration, or any other extraneous matters.

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Consequently, I have today directed the DCI to effect the arrest and immediate arraignment before court, of the accused persons named herein below:

For the following offences:

• Conspiracy to Defraud contrary to section 317 of the Penal Code, Cap 63 Laws of Kenya.
• Wilful Failure to Comply with applicable Procedures and Guidelines relating to Procurement contrary to section 45 (2) (b) as read with section 48 of the Anti-Corruption and Economic Crimes Act No. 3 of 2003;
• Engaging in a project without prior planning contrary to section 45 (2) (c) as read with section 48 of Anti-Corruption and Economic Crimes Act No. 3 of 2003;
• Abuse of Office contrary to section 46 as read with section 48 of Anti-Corruption and Economic Crimes Act No. 3 of 2003.
• Committing an offence of financial misconduct contrary to section 197 (1) (o) (i) of the public finance management act no. 18 of 2012.
• Fraudulent Acquisition of Public Property contrary to section 45 (1) (a) as read with section 48 of the Anti-Corruption and Economic Crimes Act, 2003.
• Knowingly giving a Misleading Document to Principal contrary to section 41 (2) as read with section 48 of Anti-Corruption and Economic Crimes Act no. 3 of 2003 of the Laws of Kenya.
• Wilful Neglect to Perform Official Duty contrary to section 128 as read with section 36 of the Penal Code.

The Director of Public Prosecutions is cognizant of the principle of innocent until proven guilty the determination of which can only be made by a court of law.  The decision to charge is based on the evidence that is available to the DPP at the time the decision is made.

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In view of the international nature of these crimes, we realize that we cannot fight corruption on our own and as a strategy to fighting economic crimes, the Office of the Director of Public Prosecutions (ODPP) has prioritized tracing of proceeds of crime, benefits and instruments of crime, asset confiscation and forfeiture. Consequently, this investigation has been phased. To this end, the ODPP has made several international mutual legal assistance requests to the UK and Italy to assist in the financial investigations. Once investigations are complete more charges will be preferred.

Being cognizant that corruption always fights back and that there may be elements who may seek to exploit these indictments to instigate social unrest we have put in place mechanisms to monitor any such attempts, which will be countered with whole of government response.