GDC failed to do proper due diligence; gave away contract worth billions

Geothermal Development Company was duped into giving lucrative contract worth billions to Chinese firm Hong Kong Offshore Oilfield Supply and Logistics (HOOSL).

According to investigations by EACC, the firm forged a $5.85 million (Sh667 million) performance bond from the Industrial and Commercial Bank of China to secure the contract to drill up to 20 wells in Braingo on behalf of GDC.

As punishment, the Kenya Govt has initiated the process of banning the firm.

A performance bond is usually provided by a bank or an insurance firm to ensure a contractor completes a given task.

The altered performance bond was detected by the GDC officers who then notified the Directorate of Criminal Investigations for action. The EACC was also called in to review claims of malpractices in the whole tender process but no other irregularities were found.

It looks suspicious that the anomaly was detected after payment of 25 per cent of the total cost. GDC is know for corruption and the entire procurement department must be jailed or economic crimes – Writer

On November 23, 2021, the EACC forwarded a report to the Director of Public Prosecutions (DPP) Noordin Haji recommending that the Chinese firm is debarred by the Public Procurement Regulatory Authority (PPRA) and the investigation file closed.

“On January 25, 2022, the DPP returned the inquiry file with recommendations for administrative action,” the EACC disclosed in a new report on Friday.

READ: Whistleblower wants EACC to probe GDC for corruption in procurement

Documents showed that HOOSL had already been paid an advance of $14.62 million (Sh1.67 billion), which constituted 25 per cent of the contract sum as provided for by the deal signed with the GDC. It later refunded the amount in full after it failed to mobilise enough kits to carry out the drilling job.

In December another Chinese firm, Weihai Construction Group, was banned by the African Development Bank (AfDB) over fraud in three multi-billion-shilling infrastructure projects it was handling in Kenya.

An inquiry by the AfDB’s Office of Integrity and Anti-Corruption established that Weihai Construction Group engaged in fraud in the Kenol-Sagana-Marua Highway improvement project, the second phase of the Nairobi River basin rehabilitation and restoration programme project, and the Towns Sustainable Water Supply and Sanitation Programme.

The firm was banned from AfDB-funded programmes and projects for 35 months, effective November 19, 2021.