The delay by Kenya to settle $1.5 million (about Sh151.98 million) claim for investment guarantee by the African Trade Insurance Agency has been linked to fraud by an undisclosed contractor.
The contractor was working on a project funded through the Kenya National Highways Authority.
The regional political and export trade insurer, where Kenya is the largest shareholder with 15 per cent stake (soon to be cut to 10 per cent after Ethiopia and Zimbabwe are officially admitted), in June said it was owed about Sh1.5 billion by the 10 member states.
The alleged fraud was unearthed after ATI inquired to know why the National Treasury had not made the reimbursement for the claim, following the government’s failure to meet its obligation in contractual agreements. ATI covers insurers against delayed payments from government.
Basically, countries insured by the ATI are required to reimburse claims, resulting from forgery or failure to meet obligation in contractual agreements.
ATI says the contractor was doing a project on behalf of KeNHA and may have forged the claim.
Chief executive George Otieno said the National Treasury had initially said it had settled the claim through ATI’s bank account, but later on discovered the cash was paid to the same contractor.
That could mean the contractor got double payment for the claim.
“We received a certificate of reimbursement from Kenya Commercial Bank that had been signed by KeNHA. But KeNHA says the certificate which was genuine was issued by Standard Chartered,” Otieno said in an interview on Wednesday.
He said investigations appear to indicate the certificate from KCB was forged by the same contractor.
“The Treasury says it followed up the matter and KeNHA’s explanation was that the contractor had forged the certificate. The matter is now under investigation by the police,” Otieno said.
ATI was formed in 2001 by 10 member states. The members include Kenya, Tanzania, Rwanda, Uganda, Burundi, Benin, Madagascar, Malawi, Democratic Republic of Congo and Zambia.
The agency has in the recent years enrolled nonstate shareholders who include the African Development Bank, Italian Export Credit Agency and the UK Export Finance.
“The Export Credit Guarantee Corporation is likely to join the list of nonstate shareholders next year. China Export and Credit Insurance Corporation has also shown interest in ATI membership and we are in discussions with them,” he said.
The agency says it supported Sh1.01 trillion ($10 billion) worth of trade and investments in Kenya between 2003 and 2015. This is, however, set to reduce significantly due to an imminent dilution of the country’s stake in the agency by Ethiopia’s and Zimbabwe’s entry.