How Tourism Fund Was Looted To Its Knees.

What was believed to be a jackpot case for Ethics and Anti-Corruption Commission has evaporated into thin air. Panic once gripped the Tourism Fund following irregular payments in the acquisition Kenya Utalii College Coast branch and a Sh3 billion paid as a consultancy services in the Ronald Ngala Utalii College in Kilifi County.

Former Tourism CS Najib Balala, former PS Safina Kwekwe, Kenya Tourism Fund CEO David Mwangi recorded statements on irregular  payments relating to Ronald Ngala Utalii College. Also under the probe in November 23 2012 was Catering Development Levy Trust which advertised the tender for establishment of Ronald Ngala Utalii College Coast branch and a firm that won the tender. The tender was awarded to Mulji Devraj and Bros vide tender committee No TH/6/2013-13 held on April 11 2013 at a contract sum of Sh 8.9 billion, Nilesh Halai and a director of Mulji Brothers featured prominently in the scandal.

The patriarchs of the family construction firm is Harji Keshra Halai (Haribhai) and wife Rambai Harji Halai. The family is based in Mombasa. Members of the family are Mahedra Halai, Hitendra Halai and Joyata Halai. Grandchildren in the construction firm are Shushil, Krishna, Jilna, Mithul, Krupaal, Harshil, Malini, Mehul, Jinali Annol, and Anya.

The audit report said the award of the contract was fraudulent because, Mulji Devraj and Bros was the third lowest Sh 8,961,370,998 bidder  being Sh627,615,756 above the lowest bidder at a bid price of Sh8,333,755,242, there was no justifiable reasons to have exposed the public money to risk of incurring a loss of approximately Sh627 million by awarding the third lowest bidder,” reads the report.

The consultancy aspect of the contract was awarded to Baseline Architect ltd at a cost of Sh556.8 million. In what could well be described as managed fraud, the report said, “Notwithstanding over design of the project, circumvention of the financial management laws and regulations, diversion from the project approved by the cabinet among others, the following enumerated payments made to both consultants and the contractors appear ineligible.”

The Tourism Fund investigation by EACC was under inquiry file number EACC/MLD/FI/INQ/4/2021. Kenya Tourism Fund fraudulently paid Sh8.5billion more to acquire the college in which it emerged that Balala and Kwekwe allegedly demanded kickbacks from various firms to fasttrack payments during last months of former President Uhuru Kenyatta’s tenure.

Initial report showed that the cost of acquiring the college was inflated to Sh10.4 billion against the initial projected cost of Sh1.95 billion.

Suspicious accounts were used to ripoff the the funds, one such account was the defunct Catering and Tourism Development Levy Trustee bank account at a local bank.

Although this body ceased to exist, the bank accounts are still active and are shown to have received Sh435 million in January 16 and another Sh64million in February 16 2020 to 2021. This payment from the National Treasury was to pay contractors. The irregular transfer of the project from Utalii College to Tourism Fund was done by then CA Balala through gazette notice dated April 9 2010. However, records at Tourism Fund under investigations show Sh1.2 billion only was received.

Documents at EACC desk showed that a consultant billed Sh556.8 but was surprisingly paid 817.9million. The probe established that Sh261.1 was paid extra to the consulting firm. The said money was shared among the top Tourism Fund managers in the scam, ministry officials at the National Treasury.

During financial year 2014/2015, National Treasury suspiciously made payment to Ministry of Tourism of Sh811.4 million for Ronald Ngala Utalii project, the ministry went ahead to further release Sh311.4 million to the fund insisting as a part of pay remainder owed to contractors, yet no contract between the ministry and the said contractors existed.

The Attorney General’s advice to the Ministry of Tourism reads: “We refer to your letter Ref no. OP/CAB.1/18A and dated November 3 2009. We have perused the copy of the letter Ref MT.A/4/5/3 and dated November 26 2009 and the attached draft Legal Notice to establish a training institution that is body corporate under section 29(1) of the Hotels and Restaurant Act (Cap 494). We would like to advise you that establishment of the institution by the minister under section 29(1) of the act would inconsistent with the Act.”

There are instances where the ministry of Tourism refused to transfer all the money for the project as released by the Treasury to the fund for payment of contractors. Baseline senior partner is Morris Njue. The firm was at one point barred by the court from demanding Sh1.4 billion from National Hospital Insurance Fund.

Insiders said, at one time, a bank transfer of Sh5million dated January 7 2020 was made from KCB Revenue Account to Equity Operations account but surprisingly , the amount was not reflected or received in the Equity Operations Account. The management also failed to act on Treasury’s Circular Ref: No. AG.416/3 Vol (19) dated June 24 2020.

Furthermore, the top managers deliberately delayed to pay Ronald Ngala Utalii Complex contractors on time as per the contract requirements leading to imposition of penalties and interests amounting to Sh1,520,489,236 out of which Sh516,166,749 was outstanding as at June 30 2020.

Also in a controversial scam outside the Ronald Ngala contract was signed on Feb 12 2018 between the fund a local company for the implementation and commissioning of an integrated Revenue Management System for Sh144,503,960.27 for a period not exceeding eight months that was to end on October 12 2018.

In a contract dated October 1 2019, it was varied by Sh28,900,972 and extended the contract further by five months. The consultant was to provide seamless integration to the clients’ financial systems through its application protocal, interference, Jambo pay online payments which supports multipayment interface to be defined namely; mobile banking and debit cards and agency cash collection.

What has emerged in the the above online project is that in April 2021, the fund had started paying for the maintenance services even though the project was 70pc complete. The fund entered into a contract with a local company for installation, supply and configuration of a contract centre. The contract was dated February 12 2020 for a contract sum of Sh34,631,976 and be completed in three months. Sh6,627,843 was paid to the contractor despite work not done.

The Fund also contracted a law firm to process a title deed for Kenya Utalii College from a law firm. As per the letter Re TF/CONF/10/158 dated December 17 2019, the firm, had successfully obtained certified deed plan for land Ref 5 of 35/5.

However, a valid title deed in the name Kenya Utalii Collge was yet to be obtained due to change of user approval which had taken a long time. The total amount payable was Sh11,492,655 which was paid in full on Feb 19 2020. However, in April 2021, the law firm had not obtained the title for the college despited being paid in full.

Top managers Faces behind the Fund during the looting spree were Cherutoi then acting Director of Corporate services, Erick Kiplagat Director of Levy services, Charles Okeyo Director Strategy and resource mobilisation, Eden Odhiambo supply chain manager, Emily Wagema  Corporate communication and marketing , Patricia Ondeng Legal Services, James Njogu Risk and Internal audit manager, Abraham Kiptum head of Human Capital Adan Adad and Information and Technology Isaiah Rutto