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3d agoFELIX KIPKEMOINews
A Magistrates Court will today issue directions in a case in which former executives of Lakin Basin Development Authority are facing Sh4.1 billion corruption charges in relation to the construction of Lake Basin Mall in Kisumu.
The matter is listed before Milimani Anti-corruption Magistrate Celesa Okore.
A chief economist who has since testified in the case told the court that the construction of the Mall was married with irregularities.
Richard Mwarema told the then-trial Magistrate Eunice Nyutu that value for money was not properly demonstrated and that the project lacked the necessary approvals for it to commence.
Mwarema was part of a team that prepared a report on the LBDA mall project following a memo from his boss Planning PS. The memo is dated August 2016.
He was in court testifying against former Kisumu County Assembly Speaker Onyango Oloo, LBDA Managing Director Peter Abok, the Board of Directors of the Lake Basin Development Authority, the consultants and main contractor-Ederman property.
According to the Director of Public Prosecutions, it was to cost Sh2.5 billion but was inflated to Sh4.1 billion. The accused persons allegedly inflated the tender by Sh1.6 billion with some receiving bribes to inflate the cost of the building.
Mwarema said they visited the LBDA site in Kisumu in 2016 and a meeting was held with the Authority’s management, co-financiers and officers from cooperative banks who were financing the project. They were provided with documentation concerning the project by the management.
The terms of reference were to review project implementation, viability, suitability and sustainability of the project, to review all contract agreements and provide an advisory opinion.
Their findings were that if LBDA was to undertake a private-public partnership, they ought to have sought the approval of a public oversight authority. This approval was lacking in the project.
The project, he said, was not properly conceptualized and LBDA did not consider all risks involved. The team faulted the Authority for failing to put in place mitigation measures to caution against any eventualities.
“After looking at procurement documentation, our findings on negotiations of evaluation report was that the negotiation criteria were not specified in the tender document. It was not specified but it was still done. That was contrary to the law,” said the witness.
Mwarema further indicated that LBDA did not seek the necessary legal advice from the Attorney General's office to proceed with the contract and that there was a payment of Sh280 million to Edermann before the formal agreement was signed on May 18, 2020.
The team of economists and procurement heads ultimately recommended that the relevant government authority probe and take appropriate actions on all the irregularities committed in the procurement and financing of LBDA Mall project.
The report was subsequently forwarded to the Attorney General and the Auditor General for further action.
The witness will on March 6 be in court for cross-examination by the defense team.
When the mall was under construction, then-DPP Noordin Haji said the LBDA irregularly approved additional scope of works in several meetings held in 2015, for an additional sum of Sh620 million for the construction of a showroom, tyre centre and a three-star hotel.
An earlier witness-James Kilaka-testified in court saying the original plan of the mall was altered from the acreage of land to accommodate an additional showroom and 3-star hotel.
The court heard that the board approved the increase of Sh620miollion and another Sh680 million. The component that brought about the 680 million was the showroom, tyre centre, perimeter wall among other things.
This approval the witness said should have been approved by the tender committee and not the board.
The approval of these additional sums is what brought about the variation of the original contract of Sh2.5 billion.
The contract was varied by 57 per cent from the initial Sh2.5 billion to Sh3.8 billion.
He also said the then PS had no authority to approve LBDA to source for a financier without following the due process of procurement.
He also said due process was not followed in getting a financier for the resources and that Abok had an obligation to seek for further guidance based on relevant laws governing the project.
