Development

Revealed: How Controversial Asian Family Influenced Appointment Of Tourism Fund CEO

Published

2 years ago

March 28, 2023

A local newspaper has reported that David Mwangi, the current Tourism Fund CEO, used the former tourism CS Najib Balala to stage a coup and Kebs the plum job.

According to the report, Mwangi used Mahendra Halai, owner of MuljiDevraj and Brothers Ltd a firm that was involved in the controversial construction of Ronald Ngala Utalii College. The powerful family wanted to have a friendly CEO at the helm of Tourism Fund “to facilitate dubious payments” the paper notes.

To effect the plan, the then fund’s CEO Joseph Cherutoi and the then director of corporate affairs Eric Kiplagat were to be sacrificed. They were reportedly forced to resign by the then board of trustees chairman Alfonse Kioko who had since been replaced at the board. Ruto revoked his appointment.

The staff now want Samson Kipkoech who was recently appointed to head the board by Ruto to investigate and unearth to real issues behind the exit of the two.

It is imperative to note that Balala and Mwangi babes feature prominently into the ongoing probe of irregular payments in the acquisition of Kenya Utalii College, Mwangi served as an accountant at the institution.

The college was initiated in 2007 under the regime of President Mwai Kibaki but stalled after the committee and Ethics and Anti-Corruption commission (EACC) raised concern over increased cost of construction.

In 2021, the then Tourism CS Najib Balala appointed a task force to look into the mandate of Kenya Utalii College, sustainability of its operations as well as financing and sources of the funds.

The National Assembly’s Public Investments Committee (PIC) ordered the Office of the Auditor General to conduct a special audit on the circumstances that led to the escalation of the project from its original Sh1.9 billion cost to Sh8.9 billion before it was scaled down to Sh4.9 billion.

The contract for the main works was awarded to the third lowest pre-qualified bidder, Mulji Devraj and Brothers Ltd at Sh8.96 billion and signed on May 14, 2013.

The irregular transfer of the project to Tourism Fund was done by Balala in a Gazette Notice dated April 9 2019, in what is believed to creating an avenue to fleece the fund.

The Asian family were reportedly uncomfortable with the management of Cherutoi and it’s why they wanted a friendlier CEO like Mwangi to execute their plot. The family is also said to have contributed fairly to the unsuccessful presidential campaign of Azimio leader Raila Odinga.

Cherutoi had reportedly questioned why despite having the third lowest bid of Sh8,961,370,998, Mulji Devraj and brothers were favored. This got Balala agitated.

Since he was named the CEO, Mwangi has reportedly made a number of changes in the management targeting those who were sympathetic to his predecessor. The report says they Mwangi is worried after managers started questioning why he was picked as the CEO from a regional office in Mombasa. Further, he is said to be at war with almost all the managers mostly based in the procurement department. They accuse him of witch-hunt, tailoring tendering processes and micromanaging happenings at the troubled Tourism Fund.

Project stopped

Meanwhile, a parliamentary committee has ordered the Ministry of Tourism and Wildlife to stop the completion and construction of the multi-billion Ronald Ngala Utalii college until a probe it has initiated is finalized.

The National Assembly Departmental committee on Tourism and Wildlife wants the National Treasury to provide a clear roadmap on how it will finance the project as well as clear the pending bills which include penalties arising from delayed payment and lack of funding on time.

The first phase of the project, funded by the State through the Tourism Fund, includes administration and tuition blocks, hostels, staff quarters, and a dining hall.

The Tourism Fund is seeking Ksh3.3 billion shillings to complete the construction of the facility which includes clearing pending works of Ksh1.2 billion, operation of the project (furniture sh. 215 million shillings and Services Ksh433 million shillings) and pending bill of sh. 1.5 billion shillings.

The project which started as a Vision 2030 project was earmarked to be completed in 2018 at 4.9 billion shillings but is now scheduled to consume up to 11 billion shillings once completed, as of February 2023 and is 77.74 per cent complete.

A special audit by the Office of the Auditor General on the circumstances that led to the escalation of the project from its original Sh1.9 billion cost to Sh8.9 billion before it was scaled down to Sh4.9 billion.

While agreeing on the project to be stalled, Nominated MP Abubakar Talib Ahmed, who is a member of the committee said there ought to be serious interrogation by the committee as the project had all characteristics of a white elephant.
“This is a white elephant. The committee should have a serious consultation interrogation of the project, as you advised Kenya Tourism Board and Tourism Fund not to put a single shilling into the project until we get to the bottom of it,” said Abubakar.

Lawsuit

In July 2022, human rights lobby groups filed a case seeking to block the handing over of Ronald Ngala Utalii College in Kilifi to the government over alleged corruption in its construction.

In their petition at the High Court in Mombasa, the activists claim building the college was initially budgeted for Sh2 billion but that cost had risen suspiciously to Sh9 billion.

They sued the Cabinet Secretary for Tourism and Wildlife, Tourism Fund, Mulji Devraj & Brothers Ltd, Baseline Architects Ltd, Speaker of the National Assembly, Public Investment Committee of the National Assembly and Attorney-General.

They wanted a permanent injunction issued restraining the contractor from handing over the college to the government or having it inaugurated.

The activists, all from Kilifi County, also wanted the court to declare that the respondents violated the rule of law by failing to account for public funds released for the construction of the college.

They argue that from the time the tender was awarded, there have been several variations that had the effect of creating loopholes for siphoning public funds.

A report from the Auditor-General, they say, indicates that the Tourism Fund has not been remitting financial statements for the college for review and that its management has not provided an analysis of the transfers made by the National Treasury.

They also argue that the audit report indicates that no record of contracts entered into between the Tourism Fund and consultants were provided for audit.

The activists say the Auditor-General’s report also stated that the college had not submitted financial statements for audit, contrary to the provisions of the Public Finance Management Act.

They say that, among other conclusions, the report said that no evidence was provided to confirm that procurement of architectural and other consultancy services was preceded by an advertisement for expression of interest by potential contractors.

“The petitioners contend that the respondents are responsible for the loss of public funds which cannot be accounted for as explained in the auditor’s report,” they argue.

They say that they and other citizens have a fundamental right as taxpayers to be protected from waste of public resources.

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