A confidential report by KPMG reveals a procurement scandal surrounding Safaricom's Big Box set-top boxes (STBs), which were launched in 2015. The report alleges that some Safaricom insiders manipulated the procurement process to favor a particular supplier, KAON, despite the company's lack of technical capacity.
The Communications Authority of Kenya had announced a deadline for migration from analog to digital television, creating an opportunity for companies like Safaricom to enter the market. However, the procurement process for the STBs was marred by controversy, with the ad hoc committee responsible for evaluating suppliers withholding the names of its members from auditors.
Evidence of Manipulation ¶
The KPMG report shows that the committee shortlisted several companies, including Altech, ABD, Huawei, Kaon, Humax, and Pace, based on their technical capacity. However, the committee concocted reasons to disqualify the top-ranked companies, Altech and ABD, citing concerns about their suitability as strategic partners and their willingness to embed a 3G/4G module into the STBs.
KAON, which was eventually awarded the contract, delivered only 20,000 STBs, despite being contracted to supply 250,000. The STBs were plagued by technical problems, including a weak Wi-Fi function, and were eventually recalled by Safaricom in August 2015.
Consequences of the Scandal ¶
Safaricom paid KAON USD 1,665,422 for the defective STBs, despite the contract stipulating that all invoices must include a purchase order number. The invoices raised by KAON were received before the purchase orders were raised, suggesting an insider operation.
The scandal raises questions about the level of impunity within Safaricom and the company's commitment to transparency and accountability. The incident also highlights the need for stronger oversight and regulation of procurement processes in Kenya.
The recovered account cited reporting by The Standard.
