Contractor loses $518 million KenGen tender over fraudulent papers (Kenya)


By Brian Ngugi | Business Daily, Kenya December 21, 2016

The High Court has quashed a decision by the public procurement appeals body compelling KenGen to award a Sh52 billion tender to a firm that used fraudulent documents to win the lucrative deal.

Justice George Odunga yesterday ruled that the Public Procurement Administrative and Review Board (PPARB) had no authority to revisit the multibillion-shilling tender after it was cancelled in November last year.


KenGen cancelled the tender after admitting that it may not have scrutinised some companies that were gunning for the tender.


The cancellation was done on November 9 last year, but RentCo was notified of the decision in writing on February 25.


The PPARB in March, however, ordered KenGen to reopen the tender and award it to RentCo, forcing the power generator to return to court. The PPARB’s ruling followed an appeal by RentCo filed before it in March.

Justice Odunga held that RentCo could only challenge the cancellation seven days from November 9, 2015. He ruled that the PPARB should have declined to entertain RentCo’s appeal on grounds that it had no authority after November 16, 2015.


“In my view, if RentCo intended to challenge the decision terminating the tender, it had to do so within seven days of November 9, 2015 and not February 25, 2016 which only drew RentCo’s attention to the earlier decision. It is therefore clear that the PPARB simply had no jurisdiction to entertain the request for review in light of the statutory limitation.”


“I grant an order removing into this court and quashing the decision of the PPARB dated March 24, 2016,” Justice Odunga ruled.


The State firm had initially awarded RentCo East Africa the lucrative tender, sparking a legal war with another bidder—Russia’s OSJC Power Machines—which claimed RentCo used forged documents to make it appear qualified for the deal.


The PPARB in March threatened to involve the Ethics and Anti-Corruption Commission and the police if KenGen did not award the tender to RentCo within seven days of its March 24 decision.


KenGen, however, obtained a temporary court order freezing the PPARB’s decision.


KenGen said that RentCo listed it as the borrower for funds to be used in implementing the project contrary to the tender rules which specified that the State-owned firm will not incur any liability from the deal.


Rentco East Africa won the tender one month after it was disqualified from participating in a separate contract for presenting forged documents and irregular financial statements.


OJSC Power Machines last year sued KenGen for declaring RentCo the winner despite knowing that the firm had used forged documents in its bid for the tender.

The firm also maintained that it had offered the lowest bid during tender proceedings. Power Machines had partnered with TransCentury and its subsidiary Civicon Limited.

The suit was dismissed, but Power Machines has since moved to the Court of Appeal where judges are set to deliver a ruling next year.


RentCo argues that the issue of its documents had not been brought up during the PPARB appeals hence cannot be argued in the courts which only have the authority to review what was argued before the public procurement appeals body.


The tender was to see the winner lease 50MW geothermal wellhead units on behalf of KenGen and install them in the Ol Karia V plant.

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