This archive report was first published on 23 July 2019.
Kimwarer and Arror Dams Scandal: A Complex Scheme of Defraudment ¶
By January 2019, a total of Sh19.7 billion had been processed as advance payment for the Kimwarer and Arror dam projects, despite there being no evidence that land had been acquired for the projects.
The funds paid were about 30 percent of the estimated project costs, and the Director of Public Prosecutions (DPP) Noordin Haji described the scheme as "a well-choreographed scheme by government officers in collusion with private individuals and institutions."
The National Environment Management Authority (Nema) approved an Environmental Impact Assessment (EIA) for the projects, but there is no evidence that it was ever carried out. The agency also ignored protests from other state agencies not to approve the projects.
Sh643 million was released by the National Treasury for the compensation and resettlement of people who would be affected by the projects, yet there is no evidence that land has been acquired.
The Kenya Forest Service opposed the projects due to the excision of forest land, but officials insisted on going ahead with the projects.
The Kerio Valley Development Authority (KVDA) used the Public Procurement and Disposal Act of 2005 for the concession, despite the fact that the law in 2013 prescribed Public-Private Partnerships (PPP).
CMC di Ravenna was awarded the contract despite being aware that the firm was getting into voluntary liquidation back in Italy. The firm was also awarded three other mega projects that were either incomplete or yet to commence.
KVDA officials refused to allow competition among suppliers for the contracts, and the National Treasury negotiated a loan increasing the amount to Sh63 billion, an increase of about Sh17 billion.
CMC di Ravenna submitted draft technical designs in February 2019, four years behind schedule. The National Treasury entered into a facility contract in Euros while the commercial contracts were in US dollars, occasioning further loss through exchange rates.
Sh11 billion for insurance was paid upfront, yet a government guarantee would have sufficed at no cost to taxpayers. Sh4.6 billion was borrowed in addition to the principle amount to pay interest in advance during the construction period, which to date has not commenced.
Treasury officials went ahead to borrow a loan amounting to Sh61 billion for the construction of the dams, despite being advised of the high debt stock. The borrowed funds did not pass through the Consolidated Fund accounts but went direct to individual bank accounts, guaranteeing that no one was overseeing its use.
Sh19,714,366,991 has so far been paid as advance payment, commitment fee, insurance, and other costs, yet no work has started so far.
