LARGE Infrastructure projects without qualified independent design consultancy and supervision services are like general elections where every party does its own vote tally and broadcasts only preferred results – a rigging absurdity.
And yet just such a confidence trick – or con – lies at the heart of the construction of the standard gauge railway project.
The main contract went to the China Road and Bridge Corporation and the design supervision tender to a consortium headed by China’s Third Railway Survey and Design Institute for the construction of the Nairobi-Mombasa standard-gauge line.
But Kenyan law and international best practice demand the design supervisor must be an independent entity with no relationship to the main contractor.
Four key documents map SGR design impunity
Four key documents concerning the SGR trace the arc of impunity in Kenya when it comes to the procurement of design consultancy and supervision services for Large Infrastructure projects.
They are Parliament’s explosive Public Investments Committee Report of April 2014; a Court of Appeal ruling of November 2014; and three bank transfer documents for a total of US$29,105,231 .22 (KSh2,638,389,209 .65) in November 2014.
The SGR project is Kenya’s first new railway line in more than a century. Planned during the Grand Coalition regime of President Mwai Kibaki and Prime Minister Raila Odinga, it is now one of President Uhuru Kenyatta and Deputy President William Ruto’s Jubilee administration’s signature legacy projects.
But it is being implemented without independent design consultancy and supervision services and in disregard of the 16-month-old Court of Appeal ruling barring payment to the non-independent providers of these services.
The latter are two inexperienced local firms in partnership with a Chinese corporation. The order was made pending the hearing of a case brought by an Italian firm – TEAM Group – that bid for the design supervision contract and which has a global footprint.
The PIC Report Objected mightily to the way the Transport and Infrastructure ministry and the Kenya Railways Corporation Board and management mishandled the procurement of design supervision services on the first phase of the SGR from Mombasa to Nairobi.
The PIC wanted the contract cancelled, recommended the prosecution of Kenya Railways Corporation MD Atanas Maina and of members of the KRC’s tender committee for ignoring Parliament’s directive that they procure the supervision contract through a competitive process.
The PIC concluded: “There is a clear and present danger that the construction of the standard-gauge railway will suffer from lack of truly independent supervision, especially in terms of quality guarantee and adherence to quality specifications.”
Procure an independent consultant – Parliament
The PIC explicitly called for the procurement of an independent consultant and the report was adopted by Parliament.
Despite the objections and orders of both the Judiciary and the Legislature, construction of the SGR reached Nairobi without independent design consultancy supervision services worth the name.
And then came the time to tender for the second and third stretches, from Nairobi to Naivasha (120km) and from Nairobi to Malaba (439km).
In early February this year, MPs were told on the floor of the House by Transport Committee chairman Maina Kamanda that the tender for feasibility studies for the third phase of the SGR would be floated afresh.
The Court of Appeal ruling, dated November 10, 2014, is in the public domain. It concerns Civil Application No. Nai 282 of 2014 (UR 210 of 2014) made by TEAM Group.
A three-judge Bench of the Court of Appeal comprising MK Koome, M Warsame and PO Kiage on November 10, 2014 ruled, among other things, that, “The sum of KSh3,624,248,144, or its equivalent, being 20% of the contract sum or any part thereof, if not already paid by the 2nd Respondent [Kenya Railways Corporation] to the 3rd Respondent [TSDI/APEC/EDON], be not paid pending the hearing and determination of the appeal”.
The second, third and fourth documents are wrapped in banking secrecy but have been exclusively seen by the Star after determined investigative journalism detective work in the public interest.
These documents include the defiant transfer of KSh275,091,859. 90, by the State Department of Transport to Edon Consultants International on November 12, 2014, just two days after the Court of Appeal ruling.
The third document is the transfer of KSh26,016,921 .80 to Apec Consortium Ltd by the State Department of Transport, also on November 12, 2014.
The fourth document is the transfer of US$4,863,462.12 to the Third Railway Survey and Design Institute Group Corporation of China by the Ministry of Transport and Infrastructure of the Government of Kenya on November 19, 2014, nine days after the Court of Appeal stay.
On this document the Transport and Infrastructure ministry is identified as the “Ordering Customer” and the Central Bank of Kenya as the “Ordering Institution”. The Third Railway Survey and Design Institute Group Corporation is named as the “Beneficiary Customer”.
This institution’s account is at the Bank of China’s Tianjin Branch.
The Court of Appeal was not the only Kenyan institution that ordered the stopping of aspects of the construction of the SGR’s first leg pending full compliance with the law, the rules, regulations and international best-practice where design consultancy and supervision services are concerned.
A multi-billion-shilling ‘boardroom deal’
The Daily Nation newspaper reported on February 5 that this happened because “a boardroom deal to award the multi-billion shilling consultancy to the same contractor who won the tender for the first phase, from Mombasa to Nairobi, was in the way”.
The committee was grilling Kenya Railways MD Maina.
Kamanda also told MPs that the Government of Kenya had decided to start work on the Nairobi-Malaba stretch after learning that Uganda was at an advanced stage in securing a loan to build its own Kampala-Malaba stretch.
This is instructive news indeed. Is it any wonder that Kenya is now rated the third most corrupt country in the world? What on earth were we doing pursuing another boardroom deal for the final stretch of the SGR inside Kenya?
Our EAC neighbours are also engaged in Large Infrastructure projects with Chinese loans and other financing. Ethiopia is also constructing transformative infrastructure, including railways and airports.
But nowhere else do you hear of global firms like TEAM Group being kept at bay by inexperienced and inexpert local operatives or the Executive being ranged against the Judiciary and the Legislature in acts of patent illegality.
No substitute for quality control/value for money
Cutting corners when it comes to certifying quality control and value for money in Large Infrastructure projects is a dumb thing to do. It is also extremely dangerous in the long run. And yet this is precisely what two successive regimes at the Transport and Infrastructure ministry have done with respect to the SGR.
There are good and valid reasons why independent design consultancy and supervision services are built into Large Infrastructure project contracts. There are good reasons why these rules exist and are such an inseparable part of global best practice and are therefore scrupulously enforced in the majority of law-abiding nations.
TEAM Group have good reason to want to know about the tender advertisement for the Nairobi-Navasha stretch: There was a tender for the first stretch – from Mombasa to Nairobi – and they were easily the most qualified and experienced bidders, with a portfolio of SGR consultancy and supervision projects in many other counties – including Africa – and including Chinese-built projects.
However, the previous regime at Transport and Infrastructure, under Engineer Michael Kamau as Cabinet Secretary and Nduva Muli as Principal Secretary, in conjunction with KRC management, opted to give the Kenyan SGR consultancy and supervision services tender to a Chinese firm in partnership with two Kenyan firms.
The latter two had no expertise or experience in undertaking projects of the SGR’s magnitude.
Team Group was treated to an extraordinarily crooked and manipulative tendering process in which every rule was not only broken but two findings of two parliamentary committees were disregarded and a court ruling completely ignored.
This brazen corruption and impunity were breathtaking and quite unlike anything that TEAM Group had encountered in 40 years of transformational infrastructure consultancy and supervision services, including SGRs.
Kenya’s next big scandal must be stopped in its tracks – literally – for Kenyans’ sake.
The new team at Transport and Infrastructure of CS Macharia and PS Nyakera really has no option to award the second and third design supervision contracts for the SGR by advertising transparently, internationally and competitively. Let the best bidder win and give Kenyans an SGR to be proud of for generations to come, the fruit of value for money.
The main SGR contract with CRBC has government-to-government protocols on a bilateral loan basis with China, but the design consultancy contract is financed by Kenyan taxpayers’ money through the Railway Development Levy.