The Directorate of Criminal Investigations (DCI) has launched investigations into suspected fraudulent payment of hundreds of millions of shillings by the county government of Nairobi for goods never supplied and services not rendered.
DCI says the nine listed firms are believed to have been used in a money laundering scheme and fraudulent payments.
In a letter dated July 21, the Director of DCI’s Investigations Bureau (IB) David Birech wrote to Nairobi Governor Johnson Sakaja demanding a list of tender documents, requisitions by user department, award contracts, delivery and inspection reports and all local purchase orders issued to profiled nine companies believed to have been used to siphon the money.
“This office is investigating a case of suspected money laundering in which Nairobi County Government is alleged to have fraudulently made payments to companies which did not render services,” Birech wrote.
“We further request to assign officers who have knowledge of the various processes listed above to assist us with information on their roles and record statements to that effect,” the letter added.
Collusion with officers
Preliminary investigations reveal that various section heads colluded with procurement officers, contractors and the County Treasury officials to siphon hundreds of millions from the public coffers.
The nine companies are Larsen Investment Company, Burasha General Suppliers Limited Tweem Limited, Future Link Limited, and Cloud Mobile Technologies Limited. Others are AR Pharmaceuticals Limited, Instabul Investment Limited, Ramecon Engineering Limited and Brigit West Limited.
DCI’s probe comes just a month after the Controller of Budget (CoB) Margaret Nyakang’o declined to approve Sh1.5billion expenditure requisitions they made to pay legal fees and development expenditure without proper providing supportive documents.
Nairobi County government had made an exchequer requisition of Sh2 billion to 19 law firms as pending bills without proper documentation. City Hall further made an additional clearance request of Sh379million categorised as development expenditure of building and construction supplies claimed to be ‘air supply’.
“The schedule of 19 firms to be paid does not include the invoices’ dates; therefore, it is difficult to ascertain whether they are pending bills or related to works done and invoiced in the current financial year. Please, therefore, revise the schedule to include the date of the invoices and attached copies of the payment vouchers for the 19 firms,” the CoB wrote. The letter, dated June 27, Ref: COB/NBI/001/171(11), was addressed to Sakaja through the Finance and Economic Planning County Executive Committee Member Charles Kerich.
“Further, it is difficult to match the proposed payments with the pending bills report earlier presented to this office,” the CoB added.
Sakaja’s administration made the two requisitions on June 19 (Sh562,124,660) and another amounting to Sh509,152,645.
Nyakang’o instructed the County Treasury to provide the basis for the legal fees, status of each court case including copies of judgment where applicable.
Also, the CoB’s office demanded a clear breakdown detailing the criteria used in the selection of the said payments, the recommended ‘first-in-first-out’ method used in identifying the bills and information on whether the proposed payment is a partial payment or a final payment to the legal firms.
The payments had also been blocked through a law suit. According to documents filed in court, Sakaja’s administration owes various law firms more than Sh21billion as pending bills as of January 2023.
Documents filed in court show the law firms to be paid include Makallah Theuri & Company Advocates (Sh60million), L.N Nyaribo & Company (Sh50million), Okatch & Partners (70million), Okubasu Munene & Kazungu Advocates (Sh30million), Gikunda Miriti & Company (Sh67million) and Masire & Mogusu (Sh27.5million). Others are Anne Munene & Company (Sh34million), Koceyo & Company Advocates (Sh43.8million), Roba & Associates (51.8million), Ummi Bashir & Company Advocates (Sh32million), J.W Wachira Advocates (Sh58million), Momanyi and Associates (Sh91million), Jamal Bake & Associates (Sh47million) and Bespoke Insurance Brokers Limited (Sh28million).