Nairobi — The man at the centre of a series of maize deals condemned by the parastatals' watchdog has been chosen by MPs as new deputy head of Kenya's Anti-Corruption Commission.

Now Dr Julius Rotich's suitability for the post could be called into question, as a devastating report by the Inspectorate of State Corporations recommends that he should repay from his own pocket nearly Sh4 billion lost by the cereals board during his term as its managing director.

In one sale alone, 50,000 metric tonnes of maize went to a company without it even having submitted a tender.

And Dr Rotich did not even tell his other senior managers about the sale until three days after the contract was signed, the report states.

The tenders for maize sales were not advertised and the sales were at prices negotiated with some buyers instead of at the current international market price.

Dr Rotich was recommended by Parliament for the position of deputy director for finance and administration at the Kenya Anti-Corruption Commission (KACC) only a year after the parastatal he headed - the National Cereals and Produce Board - sold off part of Kenya's strategic grain reserves, undermining the country's ability to cope with the current famine.

The sale of 200,000 tonnes of maize (about two million bags) by the board was cast as an irregular transaction in the government audit report.

Dr Rotich's appointment to KACC was supported by MPs last week, together with that of Mr Justice Aaron Ringera who will head the anti-corruption body. Both appointments have yet to be confirmed by the President.

Unknown to the anti-graft group's board of directors which recommended Dr Rotich's appointment, he featured prominently in the report by the Inspectorate of State Corporations over the alleged mismanagement of the grain reserves.

Dr Rotich was appointed head of the cereals board after its previous director, Major (Rtd) Wilson Koitaba, and its general manager were sacked after resisting plans by the Ministry of Agriculture to sell off two million bags of maize from the strategic food reserves.

They had warned that the sale would lead to the board losing a large amount of money.

When they were replaced by Dr Rotich, and with Mr Kiprono Kittony as general manager, the sales went ahead however.

The board lost more than Sh1 billion on the deals, which took place in April 2002, the auditors' report noted. It exported the maize at Sh700 a 90kg bag against an official selling price of Sh800 a bag, then in a further deal the board sold maize even cheaper, at Sh750 a bag compared with the then official price of Sh1,260 a bag.

The report by the Inspectorate of State Corporations recommended that besides being surcharged for the money NCPB lost during their management of the parastatal, Dr Rotich and Mr Kittony should, face disciplinary action "for their improprieties.

The report was produced after both Dr Rotich and Mr Kittony were suspended from the cereals board by Agriculture minister Kipruto arap Kirwa in August last year for what the minister termed "serious mismanagement" of the State corporation.

He said investigations would be carried out to establish who did what and that "those found guilty would face the law while the innocent would either be reinstated or given other jobs."

Soon after Dr Rotich and Mr Kittony were removed, the investigation began by the Inspectorate of State Corporations, based in the Office of the President.

However, in an interview with the Daily Nation yesterday, Dr Rotich defended himself against accusations in the watchdog's report.

He said: "Everything I did during the period I was the managing director and secretary to the board of directors of NCPB was above board. I obtained the relevant approvals from either the Office of the President or our parent ministry."

He said the additional 50,000 tonnes of maize questioned by the report were sold to Holbud (UK) Ltd, only after another firm, Abha Ltd, which had bid for 100,000 tonnes was unable to complete the contract.

For this deal alone, which went ahead outside the normal tendering process, the inspectors recommended that Dr Rotich should be surcharged more than Sh414 million.

Dr Rotich said yesterday that before any of the maize was sold, there was a meeting of the Food Security Committee at the Office of the President that recommended that the board sell it in the international market to raise money to pay farmers.

The committee comprised the then Public Service head, Dr Sally Kosgei, Dr Rotich, the then Agriculture minister, Dr Bonaya Godana, and his then PS Prof Shem Migoti Adhala, the then Finance minister, Mr Chris Obure, and his then PS, Mr Mwaghazi Mwachofi.

Dr Rotich said when he became head of the parastatal it was teetering on the verge of financial collapse.

"Me and my team, we managed to turn around NCPB from a perpetual overdraft of over a billion shillings to a situation where we were able to pay our bills and meet some of our financial obligations," he said.

Asked why the Inspectorate of State Corporations would accuse him and his team of "serious managerial improprieties", Dr Rotich said: "I have no idea. What I can tell you, and God is my witness, is that I never engaged in any malpractices at all."

Mr Kittony was not available for comment.

The inspectors' report provides a damning catalogue of mismanagement at the board, stretching back over 10 years.

It includes the following "managerial improprieties and structural weaknesses:

- Irrational trading practices leading to persistent generation of losses;

- Irregular recruitment and promotion of staff;

- Fraudulent tendering and procurement;

- Fraudulent disposal of relief maize;

- Fraudulent payment for transport of grain;

- Poor pricing policy'

- Low general calibre of management staff;

- Lack of credit policy;

- Weak internal checks and balances.

According to the report, the board lost a total of Sh 4,041,152, 626 in various transactions authorised by Dr Rotich and Mr Kittony.

It states Dr Rotich, through "managerial impropriety" made the parastatal incur a loss of Sh1,132, 295,585 by authorising the export of maize at Sh700 a 90 kg bag when the official selling price was Sh800.

It also accused him of authorising a further export of 20,000 tonnes of maize at Sh750 per 90 kg bag when the official selling price was Sh1,260, losing the board a further Sh1,007,851,137.

Dr Rotich said yesterday the price of Sh700 a bag was based on the advice of an in-house price recommendations committee.

Other improprieties he is accused of include authorising sale of 50,000 tonnes of maize without a tender and for this, the report recommends he should be surcharged Sh417million.

The report also accuses the former MD of exceeding his authority by acting without the approval of the Government to sell some 542,268 bags of maize stored under the Famine Relief Programme.

Famine relief stocks are usually disposed of against requisition and release orders from the Office of the President.

"The commercial disposal of hundreds of thousands of tonnes of Famine Relief Programme maize and non-remittance of the proceeds to the National Cereals and Produce Board/Government of Kenya Agency account is the first such instance in the entire 10-year period covered by this probe," notes the report.

It adds: "Moreover, the decision to dispose of the additional 500,000 bags of maize was not made by the NCPB board of directors and it therefore falls squarely on the lap of the then managing director Dr Rotich."

According to the report, in another transaction he authorised, the board lost Sh765,691,100 - and the report recommends he should be made to repay that, too.

Both Dr Rotich and Mr Kittony were also accused of renegotiating the price of maize against the board's interest and thus making the parastatal lose Sh718, 648,140. The report recommends the two should be jointly surcharged for that loss.

The report also questions why Mr Kittony, authorised the deposit of board money in non-interest bearing accounts instead of the interest earning account at the Kenya Commercial Bank.

Mr Kittony, the report says, should be surcharged Sh5,066, 675 for authorising payment in kind to M/S A.O. Bayusuf and Swan Carriers. Both firms were owed money by NCPB and instead of being paid in cash, Mr Kittony allowed them to be given maize equivalent to the amount owed but at a lower price than the official one.

The report also recommended that the NCPB chief supplies officer be surcharged for illegal disposal of a vehicle, registration number KTQ 561, while the company secretary should be reprimanded for the same transaction.

Other questionable deals at the NCPB during the period when Dr Rotich was in charge included the irregular purchase of computer software that did not conform to the board's accounting procedures and codes.

The software tender was awarded to Kenya Micro Computers Ltd at Sh15.4 million, which supplied software known as Hogia Art and Payroll System.

It is not clear why the board's tender committee awarded the contract to that company when its software was not compatible with NCPB's.

The report noted: "Hogia Art software has an inventory system that cannot be applied to agricultural stock control and it is not clear why the tender board was willing to bend backwards over to accommodate Hogia Art System when it was clearly inadequate in so an important aspect."

The report suggested that beside the former MD, the entire tender committee and several other current and former senior managers should be surcharged for recommending a system that has never worked and will never work.

However, Dr Rotich said yesterday that the decision to buy the software had been reached by the time he was put in charge.

"By the time I got there the decision had been made and money paid to the suppliers. In fact I tried to stop the deal, although a contract had been signed," he said.

On the recruitment of personnel, the inspectors suggested that a more equitable recruitment policy should be adopted to address the current anomaly where over 70 per cent of the 953 employees including all the managing directors (past and present) in the past 21 years of NCPB's operations are from the same ethnic community.

Before going to the cereals board, Dr Rotich was deputy director of the defunct Kenya Anti-Corruption Authority (Kaca).

When Kaca was dissolved by a court order for being unconstitutional, Dr Rotich was appointed managing director of the cereals board in February 2002, replacing Major Koitaba.

Agriculture minister Mr Kirwa said yesterday he was yet to receive an official copy of the damning report.

"When I get the official report the ministry will study it and then act accordingly," he said.

Asked to comment on reports that the Government has been flouting its own regulations that require it to have in storage at least three million bags of maize and other cereals at NCPB as part of the Strategic Grain Reserve and Relief Food Reserve programme, the minister said:

It is true we have been operating below par in regard to cereals but at least the Government has always retained the reserve in cash.

He added that the money would be used to buy two million bags of maize to top up the strategic reserve to the required level of three million bags.

The minister also conceded that had the maize that was sold by the board been kept as part of the strategic grain reserve, the famine would not have been as intense as it is today.

The report, compiled by the Inspector General of State Corporations, Mr J.M. Otenyo, was copied to Public Service head Francis Muthaura, the then PS in the Ministry of Agriculture, Mr Joseph Kinyua, the PS in charge of Provincial Administration and National Security, Mr Dave Mwangi, the PS for Governance and Ethics, Mr John Githongo, and the Controller and Auditor General, Mr Evans Mwai.