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Riddle of loan bigger than water firm income




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How a water service provider that collects an average of Sh240 million a year entered into a deal with a consortium of foreign private investors worth billions of shillings, is now the subject of an investigation by the Ethics and Anti-Corruption Commission (EACC).

Tavevo Water Company of Taita Taveta County got into a deal with the consortium led by Miraadi Ltd for the Njoro Kubwa Bulk Water Project to supply water to Jipe Settlement Scheme in Taveta and several ranchers in the county, with 10 percent of the water meant for household use in other parts of the county.

The Kenya Innovative Finance Facility for Water (Kiffwa) was listed as a co-developer and financial adviser of the project.

The consortium was to contribute Sh6.2 billion, which was to be converted to a loan repayable by Tavevo in equal amounts for six years.

This translates to more than Sh1 billion a year, yet Tavevo’s annual revenue collection is way short of that, according to reports by the Auditor General.

The company has been receiving adverse opinions from the Auditor General due to various audit queries and liquidity issues.

The questionable deal was entered into by former Governor John Mruttu’s administration just months to the August 2017 General Election.

The EACC’s investigations follow a complaint by the current county administration. “We have formed a team to investigate the allegations. That is all we can say for now,” EACC’s communications officer Yassin Ayila said.

Of interest is that, except for a few correspondences and a memorandum of understanding, there are no documents to prove that procurement procedures were followed and the input of the County Assembly, National Treasury and the parent water ministry obtained.

Correspondences seen by Sunday Nation show that the county first wrote to EACC on February 21 and a follow-up letter on June 7 inviting the commission to initiate investigations into the matter.

“Your expedient action will be greatly appreciated, paving the way to prosecution of those culpable,” the county’s legal adviser Edwin Chahilu said in the letter of June 7.

The EACC acknowledged receipt of the complaint, including audit reports, on July 5.

“The commission will institute an investigation into Tavevo company to ascertain the veracity of the allegations,” EACC deputy director in charge of investigations, Mr Humphrey Mahiva, said in the letter.

Attempts to get the former governor to shed light on the matter did not bear fruit as Mr Mruttu declined to answer our questions. “This being a private investment, please talk to the investors,” he said.

Tavevo managing director Habel Mwagha, now on suspension, did not respond to our messages for his side of the story.


Mr Tony Mwaruwa, managing director of Miraadi Ltd, which is the lead developer of the project, promised to give a response but had not done so by the time of going to press.

“We have a legal advisory on the project. We prefer to have a formal request to which we will respond in writing,” he said, and requested that we send him our specific queries through e-mail.

Later, he sent the reporter a threatening text message: “Your actions in the last 24 hours amount to harassment. It has been reported to Kilimani Police Station. Our lawyers will pick it up from here. Publish the unsubstantiated story at your own risk.”

Tavevo entered into the deal on January 30, 2017, just seven months to the elections and had the backing of Mr Mruttu, who in a letter dated June 28, 2017, said the county government “affirms our full support of the project”.

“The county executive has been actively involved with Miraadi since January 2015 vide a memorandum of understanding with them to develop the same project,” the governor noted in the letter.

Before the award was made, Tavevo is alleged to have spent Sh536,329 on project design by Amiantit Ltd, a company based in South Africa, and on benchmarking trips to different countries.

In the complaint to EACC, the current county administration claims that despite the huge amounts of money involved, “Tavevo does not have any records of transactions or documentation to qualify the journey towards this “flagship project’”.

Except for letters of award and acceptance and the memorandum of understanding, the complainants say they have found no minutes of public participation and of tender committee of county assembly approval, or input from the National Treasury and the Ministry of Water.

Moreover, there is no contract with the consortium on what the project entails and the obligations of the parties to the deal.

Mr Chahilu says the deal was never mentioned during the handover by the former governor to the current administration and no documents on it were given.

“The whole project was planned in an extremely casual way. All orderly, legal and regular ways of handling projects were avoided.

“The process of acquiring the loan is defective in that although the loan was sourced from outside the county, the governments both at national and county levels, were not appropriately done. This raises questions on guarantees of the loan. How was this aspect taken care of?” Mr Chahilu posed.



Sordid tale of the bank ‘that would bribe God’




Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –




Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

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William Ruto eyes Raila Odinga Nyanza backyard




Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

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