Henry Rotich, Kenya’s National Treasury Cabinet Secretary was arrested on Monday on allegations of financial misconduct related to the KSh63 billion construction of Kimwarer and Arror dams.
Rotich will be charged along with 27 other people, including Italian Paolo Porcelli, the director of CMC di Ravenna and Treasury Principal Secretary Kamau Thugge.
The charges to be preferred against Rotich include: “conspiracy to defraud”, “abuse of office”, “financial misconduct”, “engaging in a project without proper planning” and “willful failure to comply with procurement laws.”
Noordin Haji, the Director of Public Prosecutions on Monday said, “The persons we are charging today were mandated with safeguarding our public interest and deliberately breached this trust and not only bound Kenya to a loan but they ensured that the funds did not come into the consolidated fund, in effect guaranteeing that no one was oversighting its use, they broke the law on public finance management, under the guise of carrying out legitimate commercial transactions colossal amounts were unjustifiably and illegally paid out through a well-choreographed scheme by government officers in collusion with private individuals and institutions.”
The DPP alleges that whereast the commercial contract signed between KVDA and CMC Di Ravenna/Itinera JV clearly states that Kimwarer Dam would cost USD 204,020,149.02 while Arror Dam would cost USD 252,188,732.27 totaling to USD 456,208,881 (approximately KSh 46 Billion), the National Treasury negotiated a commercial facility increasing the amount to approximately KSh 63 Billion which is 17 Billion more than necessary or required payable on a timely basis without regard to performance or works.
“If this project was carried in the strict adherence to the law and existing policies in place to safeguard public interest, it should not have cost Sh63 billion. The evidence establishes malpractices that impacted on our national debt,” he said.
“Some KSh4.6 billion was borrowed in addition to the principal amount to pay interest in advance during the construction period, which to date has not commenced. As a country, we continue to pay interest on the loan. We borrowed, the loan had interest, we borrowed more money to pay the interest which also attracted interest. A further KSh643 million was released by the National Treasury as a counterpart fund which was meant for the resettlements of the persons that would be affected by the same projects for the compensation of land acquired.
However, there is no evidence that land has been acquired four years down the line. Furthermore, Kenya Forest Service any excision of forest land, pointing to a significant adverse impact on the forest ecosystem,” according to Haji.
In February, Rotich in a statement said the ministry was concerned that the reporting on the dams scandal ‘is devoid of facts and correct information’.
“The financing agreement for the projects was Government-to-Government. Service Assicurativi Del Comercio Estero (SACE), an Italian Government-owned entity providing insurance cover and financial support,” said Rotich.
According to Rotich, SACE, owned by the Government of Italy, covering 87.7% of the loan facility and International bank lenders (BNP Paribas Fortis S.AIN.V, Intensa Sanpaolo, S.P.A, UniCredit S.P.S, and UniCredit Bank AG) which contributed 12.3% of the financing. However, in terms of coverage of the contract amount, the commercial facility amount represents 15% and SACE facility 85%.
The DPP said investigations by the Directorate of Criminal Investigations (DCI) had determined that the accused did not follow proper procedures, aiding the loss of funds allocated for the dams project.
“The Director of Public Prosecutions is cognisant of the principle of innocent until proven guilty the determination of which can only be made by a court of law,” said Mr. Haji said.
“The decision to charge is based on the evidence that is available to the DPP at the time the decision is made.”
