Monday, September 28, 2009



By Standard Team

Even before investigators close files on Kenya Pipeline Corporation’s Sh7.6 billion Triton saga and Sh6 billion lost in Line 1 extension, boardroom wars have imploded over upcoming Sh14 billion oil pump project.

Besides the stampede over the upcoming project, KPC risks paying out in excess of Sh200 million to Customs Department for ‘goods’ it just received on paper and for which documentation purports to have been sourced from outside the country. The trick, sources at KPC reveal, was to let the clearing agent raise the Custom duty from its accounts then seek reimbursement from KPC — which would then pay up plus a commission of three per cent.

Down the road this process was abused as the clearing and forwarding companies colluded with KPC management, revenue officials and bank staff to draw up documents purportedly reflecting ‘import’ of the goods. For every faked import, a token sum was declared as duty payable to KRA and money was actually paid.

However, forensic examination by Customs Department now reflects a different story, and KPC’s senior management is said to be wary of KRA’s meticulous approach to these issues that are not reflected in its world class Simba software computing system.

So intense is the new tussle that the rules have been bent by top Energy ministry officials and KPC management in the process of filling up slots left vacant by the firing of senior staff in the restructuring ordered by Minister Kiraitu Murungi in June. At the time the minister, who was reacting to a KPC own audit report that Sh6 billion was sunk into an incomplete project and even after completion, said it did not attain the pumping capacity for which the President was called to unveil the opening plague.

In what is becoming KPC’s stubborn face of scandal, fresh complaints of massive corruption include the haul of old machinery parts from its plant by a well-connected internal cartel, which are then refurbished by a Kenyan-based company that purports to be Japanese — then the same ware is resold to KPC as brand new.

The magnitude of managerial problems at KPC is discernible from the fact that already the police are investigating an attempted assassination of a manager. Sources revealed an Administration Police inspector and a Sergeant, along with two civilians were arrested as they planned to kill the officer. Their paymasters are believed to be KPC insiders. A third civilian involved but who chickened out at the last minute leaked murder plot to the police. When the security officers were arrested, they were found to be linked with a robbery in Nyeri and are fighting this particular charge as investigations progress on the planned assassination.

The head of special crimes prevention unit at Criminal Investigations Department Mr Richard Kasola confirmed investigations were still on and revealed it covers six suspected accomplices, among them KPC staff. But at KPC a senior manager declined to discuss the matter and referred us to the CEO Mr Selest Kilinda whose calls all went unpicked even after the senior manager promised to link us up with him.

vantage positions

The new war, in which top Ministry officials are repositioning themselves for vantage positions as the Line 4 oil pipeline extension from Nairobi to Western draws closer, is so intense that a member of the Board is said to have meddled in a new list of senior managers to be announced anytime beginning today.

"He arm-twisted the board, he has the chairman and the new MD on his side. He wants a new team that would help cover up his footprints in past scandals and who will feel indebted to him for their positions. In one case he told the board one of the acting managers would not be promoted because he was too strict and ‘not for the system’,’’ said a KPC insider.

He gave the case of a top manager he single-handedly pushed to be promoted even though he did not have the requisite certificate of registered engineer as was advertised. Worse still he had not even applied because he did not have the strengths sought in the newspaper adverts for the job and only did so after he was reportedly assured by his ‘handlers’ at KPC that the job was his to lose.

Clean up mess

On Sunday, KPC officials were at a loss over the story. The public relations consultant Mr Sam Karanja, who was referred to The Standard by KPC management said, "I am trying to lay my hands on the facts before we can give you comprehensive response."

Said Karanja, "There is nothing I can do for now... please hold the story because I do not have the facts."

Responding to our queries, PS Energy Patrick Nyoike said the appointments were fair and competitive, adding that the new team would clean up the mess and restore confidence in KPC.

Nyoike who spoke to us on the telephone said the newly appointed managers recruited from outside are expected to report next week. He said he did not participate in recruitment of KPC staff except for the MD.

When asked about a manager who has been offered a position and yet he is not a registered engineer he said: "Any senior engineer who is not registered will not get the job."

He said the extension of the Eldoret-Kampala-Jinja pipeline would cost USD 180 million (Sh13.5 billion).

Kiraitu did not respond to our queries. His public relations agent Mr Tony Kago said he would revert to us with answers but he hadn’t by press time.

The cyclic wave of corruption in KPC, that defies changes to senior management positions and for which have seen the careers of former MDs shattered before being hauled before courts, is linked to three clearing and forwarding companies. They are all in turn linked to senior politicians and a handful of Energy ministry officials. The endless cycle of scandals at KPC is said to have deflated staff morale, precipitated frequent punitive transfers and sackings, and completely subjugated the corporation to the whims of top ministry officials. "They come here and order us around like they did during the Triton saga, asking operation guys to release the oil. But when the scheme bursts, you see them on television declaring they are not involved in daily management of KPC and will try and find out how that could have taken place,’’ said another KPC manager.

playing with fire

Several examples of the graft cases in KPC were given, including one currently under investigation by Kenya Anti-Corruption commission. A company by the name ABC Metallurgicals Ltd won a Sh45 million tender but after the supply of what it bid for, the invoice went to a company bearing close names but which investigators believe was a fake formed to shadow it. The company under investigations calls itself ABC Metalurgiacs and is believed, with the help of senior KPC officials, it always got away with the tenders bid for and legitimately won by the first.

This second company is said to be connected to a son of a senior Party of National Unity politician and when its payments were queried, a senior Energy ministry official is said to have warned the Finance Department it was playing with fire by standing between him and the loot.