A Chinese contractor has reportedly pocketed $4.3 billion in taxpayers’ money for failing to do work on a mega-project at Jomo Kenyatta International Airport, which infuriated lawmakers.
That Company had won a $64 billion bid to build the greenfield terminal that was canceled in March 2016. There have been claims that its cost has been inflated by as much as 9 billion shillings.
President Kenyatta led the groundbreaking ceremony for the project, taxpayers Sh75 million on 23 May 2014.
According to a report due to be considered by the National Assembly next week, MPs noted that Sh4,310,901,806 had been paid to the contractor but there was no evidence of the work done.
The Public Investments Committee (PIC) report calls for the Kenya Airports Authority (KAA) to start the recovery process immediately.
“The Accounting Officer for KAA should proceed with the recovery of the advanced funds immediately begin the contract or and the consultants,” the report said.
Chaired by Mvita MP Abdulswamad Nassir, the committee said there was no basis for the payment.
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“During our investigation, we have received no comment as to why the amount was paid to the contractor. It should be reclaimed,” said Mr. Nassir.
“We have done our part as PIC and exposed how taxpayers’ money has been misused. It should be brought back to the people,” he added.
A response from management indicated that the money was paid in advance to the contractor, as provided for in the contract agreement. It was to be collected from subsequent advance payments.
“Payments to contractors and consultants were not based on evidence of assessed work. Since the contract had been terminated without any work being done, it was not clear why KAA’s management had not taken any action to refund the advanced monies,” the report said.
The committee said the project failed right from the start due to illegalities, since the authority had concluded the contract before the contractor had found a financier for the project. Clause 5 of the Request for Proposal required the contractor to secure a project financier as a condition of the award.
However, KAA signed an agreement with Anhui Construction Engineering Group Ltd as a joint venture with China Aero-Technology International Engineering Corporation on November 13, 2013 and obtained ownership of the site on December 6, 2013 before a project financier was identified.
The monitoring contract was awarded to Louis Berger Group and Runji Partners (LBG) to $8.83 million.
“KAA’s management breached clause 5 of the contract agreement, which made it a condition precedent for the contractor to secure a funder prior to signing the deal. It was not clear why KAA was in a rush to sign a contract whose precedent condition for attracting a sponsor had not yet been met,” the report said.
The two contractors told the committee, that they had identified two lenders – China Development Bank Corporation and China Exim Bank – whose engagement was to be carried out by KAA.
Also read: KAA May Pay Shs 4.3 Billion to Chinese Company not traced for terminal< /p>
Directors of the company told the committee in March that at the time the deal was signed, the said commitments had not yet materialized into a valid funding agreement by the agency.< /p>
“Then KAA’s accounting officer should be reprimanded for entering into a contract before securing a sponsor,” reads the report.
The contractor is reportedly demanding Sh17bn from KAA for breach of contract. The company wants the authority to pay Sh2 billion for the preparation of bills of quantities, Sh2.4 billion in additional costs and Sh708.2 million in VAT collected by the Kenya Tax Authority.
< The company has requested an additional Sh5.6 billion which includes contract balance for bill of quantities, VAT and interest and penalties. However, the committee has warned the agency not to make any payments to the contractor before the attorney general has obtained a legal opinion, curious. They said the amount was not foreseen in the original scope of work and is therefore an irregular contract change.
After completion, there should be 50 international and 10 domestic check-in counters, 32 contact and eight remote gates, associated Apron with 45 stands and connecting taxiways.
The terminal should be an environmentally responsible building and be certified by the World Green Building Council under either Leed or Green Star certification schemes. The project was to be implemented under a design and build contract.