Just like it has always been in the unending scandals in Kenya reported in most cases, payments are made and nothing is delivered.
A multi-million maize scandal that crippled the operations of the National Cereals and Produce Board in 2004 has come out with new information after it emerged that a businesswoman had ganged up with a Member of Parliament John Waluke and forged documents to indicate that they stored maize in a South African warehouse as part of a ploy to justify a Sh500 million claim.
The two were said to have fraudulently acquired Sh297 million from the public as the cost of storing 40,000 tonnes of maize which was to be supplied to NCPB.
Before a dispute arose between NCPB and Erad Supplies & General Contractors Ltd, the company had been contracted to supply 40,000 metric tonnes at $229 per tonne and was required to ship the maize to the Mombasa port within four weeks from the date of signing the contract.
Ultimately, no maize was delivered and Erad referred the disagreement to an arbitrator.
Experts checking the safety of maize in the NCPB silos
NCPB, through lawyer Patrick Lutta, argues that using these forged documents, the two business partners, who are directors of Erad, were able to successfully argue an arbitration case against NCPB, and were awarded $3,106,000 (Sh311,184,072.50) in 2009.
This included $1,960,000 (Sh196,378,641) on account of loss of profit, and $1,146,000 (Sh114,861,580) on account of storage costs due to the supplier, as well as interest at 12 percent per annum with effect from October 27, 2004, along with the costs of the arbitration proceedings.
The arbitrator also dismissed NCPB’s counter-claim, in the total sum of $71,006,549 (Sh7,113,097,436).
NCPB, which is supporting requests by the Ethics and Anti-Corruption Commission (EACC) and the Director of Public Prosecutions (DPP) to have Mr Waluke and Ms Wakhungu prosecuted for graft, said the two proceeded to demand and recovered over Sh314 million from it on the basis of the award.
“Mr Waluke and Ms Wakhungu executed the arbitral award and recovered over Sh314 million from NCPB after attaching and selling its assets and obtaining garnishee orders against its bank accounts,” Mr Lutta says.
EACC investigations locally and abroad — made possible through Mutual Legal Assistance (MLA), an arrangement where the State requests the government of another country to help it obtain evidence — has established that the procurement process and alleged purchase and storage of 40,000 metric tons of white maize was a well-orchestrated fraud by Erad’s directors.