One day in August last year, Kenya Commercial Bank called the board of the Kenyatta International Convention Centre to confirm payment of Sh119 million to a company called Dominion Supplies providing services for the upcoming WTO summit in December 2015.
It then emerged that several contracts worth hundreds of millions that had been issued to companies in disregard of procurement procedures.
CEO Fred Simiyu was interdicted on November 27, 2015, shortly before the WTO ministerial conference in mid-December. His case is still pending but in April 2016 Tourism CS Najib Balala appointed Nana Gecaga, niece of President Kenyatta, as acting CEO.
A new KICC board, headed by chairman Omingo Magara, was appointed in April 2015 shortly before the Global Entrepreneurship Summit attended by President Obama in July 2015.
The new board soon started clashing with management over various contracts. Last week the Ethics and Anti Corruption Commission called the KICC board to explain what had happened.
"It was unbelievable what we found," said a source involved in the process. "The management had single-sourced so many contracts and manufactured quotes from companies in order to support the bids by the companies they wanted to award the jobs."
The directors of Dominion Supplies are Elias Gitonga Mairanyi and Yusuf Karani with just one share each. The rest of the shares are believed to be held by a former director of Euro Bank, which collapsed in 2003 with Sh1.4 billion in funds deposited by state corporations.
Dominion's contract for Sh597 million was to supply and install a conference management system in KICC for the WTO ministerial summit in December.
After KCB's call, the KICC board audit committee asked the management for supporting documents but says there were none. It found out that Taiden, a top Chinese company that provides the same service to the United Nations, could have provided the same service for Sh180 million.
The World Trade Organisation uses the German company Bosch as a preferred supplier. Bosch had already set up conference systems at the Intercontinental Hotel and Crowne Plaza where other activities were being held so the KICC board wanted to know why Bosch had not bid for the KICC contract.
"What we were told was interesting. Bosch said they did bid but were told they would be offered the contract for Sh302 million only if they worked through Dominion which was charging Sh597 million. So if Bosch was doing all the work, what value was Dominion adding to warrant the Sh295 million it was to take home?" the source said.
After the board queried the payment, Simiyu, who had signed the award letter dated July 13, 2015, wrote a letter to Dominion on November 13 , terminating the contract.
Finally Bosch through its Africa partner, Congress Rental of South Africa, was contracted to provide the service to KICC for Sh301 million which the KICC board negotiated down to Sh250 million before payment.
Following a board meeting on November 27, KICC chairman Omingo Magara issued a letter of interdiction to Simiyu and ordered him to vacate office.
"The KICC board of directors having interrogated the process concerning the sourcing of the CMS equipment for the WTO MC10 and having examined documents tabled at the board, were satisfied that your actions were not befitting of the CEO of KICC," Magara said in his letter.
In another show cause letter Magara then listed other contracts that the board believed had been issued irregularly.
Dimension Data Solutions was awarded a contract for Sh88 million to conduct network overhaul, redesign, segmentation and extension without approval by the tender committee.
Rostrum East Africa was awarded Sh14 million to supply and instal an electronic bulletin board system without approval of the tender committee.
Builders 7o was issued with an award letter for Sh59 million to supply demountable sound proof partitions for two rooms in contravention of the procurement laws.
Greenstar Systems was unilaterally issued with an award letter and contract for Sh76 million to refurbish offices without approval of the tender committee. In the award letter Simiyu referred to a meeting of the tender committee on September 21, 2015 which Magara claims never took place.
Protegee Systems was awarded Sh24 million to carry out refurbishment of the VIP lounges before it was approved by the tender committee. The award letter referred to a meeting of the tender committee on September 29 which Magara claims did not take place.
Chege Designers was issued with an award letter for Sh78 million for rehabilitation of the revolving restaurant. The award letter referred to a tender committee meeting on September 22 which Magara claims did not take place.
Express Automation Ltd was awarded Sh69 million to install heavy duty photocopiers and printers without following procurement rules.
Sato Enterprises Ltd was awarded Sh63 million to supply assorted ICT equipment while Unicore Projectors was issued with an award letter for Sh69 million to supply conference vision equipment without approval of the tender committee.
Fumac Kenya was given an award letter for Sh8 million for construction of bookshop and media booths. The letter referred to a meeting of the tender committee on September 29 which Magara claimed did not take place.
Onfon Media Ltd was issued with a tender for Sh44 million for an electronic surveillance system and the letter referred tender committee meeting on September 29 which Magara claimed did not take place.
Hydro Winds Company was awarded a tender to supply office furniture for Sh43 million.
Three companies were awarded contracts to rehabilitate the same washrooms. Creative Edge received Sh39 million, Greenstar Systems Sh10 million and Builders 7o Sh37 million. As a result, one company stripped the wall tiles and installed new ones, only for the next company to remove the newly fixed tiles and install new ones.
On February 16, 2016, Simiyu responded to a show-cause letter sent to him by the board.
"The projects associated with the 10th WTO conference were approved by the full board of directors in a meeting held on July 11, 2015. I did not irregularly or unlawfully procure and enter into contractual obligations on behalf of KICC with respect to projects related to the World Trade Organisation conference," he wrote.
Simiyu said he cancelled Dominion's contract for the computerised conference management system on the recommendation of the tender committee.
He defended the award to Dimension Data for the structured cabling and said he circumvented Kenya's procurement rules because Dimension Data, owned by Cisco, was recommended by the WTO after its Bali conference in 2014.
"The recommendation of the tender committee (to cancel the award) did not have any effect as WTO had already settled on the best service provider," he said.
Simiyu said he cancelled the contract to Rostrum East Africa as well as the tender to refurbish the VIP lounges and instal conference visual equipment because of lack of funds.
He said refurbishment of the tower block "was a must do project since the floors had been vacated by Senate for refurbishment. The refurbishment was urgently required as evidenced from a copy of the email sent by one Mr Campanelli Danio from World Trade Organisation." Simiyu referred to minutes of the tender committee meeting on September 23 at the Learning Centre.
Simiyu said the revolving restaurant rehabilitation award was made "due to the specialised nature of the works". He however said questions should be directed to the general manager.
Simiyu also directed questions on customised structures, electronic surveillance systems and supply of office furniture to the General Manager Operations at KICC.
He said he cancelled the Sh39 million tender awarded to Creative Edge for rehabilitation of washrooms but paid the other two companies who were awarded the same contract.
KICC asked two law firms to provide opinions on the contracts.
Gitonga, Mureithi and Company concluded that the pre-qualification process was not followed for refurbishment of the tower block offices covering six floors.
"There is no documentation for the process used to finally award the tender to Greenstar Systems Ltd," the lawyers said.
"The resultant contract was illegal and unenforceable," the firm said and concluded that Greenstar should be surcharged for the Sh10 million it received.
Ogetto, Otachi and Company found that all the disputed contracts were improperly concluded.
"Having found that the letters of awards and the contracts were illegal, null and void, no party to the transaction can seek to enforce a benefit arising thereunder," the law firm told the KICC board advising them not to pay any claims by the companies.
"Any officer of KICC who authorises payment relating to the supposed awards exposes themselves to prosecution under the Anti-Corruption and Economic Crimes Act," it said.
The KICC board members today were chairman Omingo Magara, Johana Muchai, Charles Gacheru, Kavi Mwendwa, Kenneth Waithiru, Lucy Makumbi-Macridis, and Acting CEO Nana Gecaga. Gacheru and Muchai's appointment to the board were revoked on May 31, and Tourism CS Najib Balala appointed Ken Boit and Lilian Osamong as their replacements.
Simiyu and two other officers of KICC were also taken through a disciplinary process by the board and sacked this month.
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