22 April 2014

Kenya: GDC Former Chairman Foils Plot Over Old Board Minutes

Photo: ARGeo
Olkaria geothermal plant

Geothermal Development Company former chairman Paul Gondi has revealed that the GDC management irregularly varied the cost of a contract by an additional Sh130 million without approval of the board.

The tender committee had on 8 August 2013 deferred the request to vary the tender amount to supply three drilling rigs, but MD Dr. Silas Simuyu and Company Secretary Paxidis Saisi went ahead to sign the deal with Chinese company Sichuan Hongua Petroleum Equipment Ltd.

The amounts were changed from 64.7 million dollars to 66.3 million dollars.

Gondi has also revealed an attempt to two weeks ago to have him sign the minutes of 18 board meetings that were never properly authenticated.

Gondi has protested at being asked to belatedly append his signature to the minutes of meetings held between March 2009 and June 2012, to justify the expenditure of billions of shillings in several projects.

Yesterday, Dr Simiyu said he will today address the issues raised once he is in office. "I am not in office at the moment, I can only adequately respond once I get back to office tomorrow," said Dr Simiyu.

On 14 April 2014, Gondi wrote to the new chairman Simon Gicharu revealing the request that had been made of him.

"I enclose a folder of Board minutes of meetings of various dates which was forwarded to me by Dr. S Simiyu to sign last week on 8th April, 2014. Strangely enough, and even if I were to sign then, the Company Secretary then, Ms Praxidis Saisi, in most of these minutes would have been the one to bring them to me, and lead me, before I present them to you, and the Board to note that these minutes, I must sign them in your presence," Gondi said.

"In view of the fact that I am no longer the Chairman, I cannot be able to sign them as I have no way to verify the deliberations of the past. A look at them indicates that some of them do not capture full details or true to my memory and therefore I cannot sign," he said.

Gondi adds: "What should have happened is that, if I were invited to hand-over then, we would have together with you and the CEO brought them to your attention and in the presence of other Board members I would have signed in concurrence with them that views captured were true reflection of what we discussed. As the Chairman, you should see the best way to handle the matter."

Yesterday, when asked why he did not raise the issue during the handover to the new chairman, Gondi said he was deliberately blocked.

"The CEO never allowed me to hand over. I had told him (Dr Simiyu) that when the new chairman reports, we should agree on a date so that we call the board then I hand over. He never called me. Some board members later asked me why I did not come to the hand over and I told them that I did not know about it. He had told the board that I was out of town. I later went to the Principal Secretary Joseph Njoroge to protest about why I was not allowed to hand over," Gondi said.

The former chairman said he suspected he was blocked because he would have revealed some irregular issues at GDC.

"The steam generated electricity could be less than the 100 megawatts the CEO has been talking about. We as the board asked for the steam gathering report which was never brought. You must see this report to know how many megawatts is actually produced," Gondi said.

Most of the minutes forwarded to Gondi for signature had already been signed by Saisi and dated 21 August 2012. A few others were signed by Board member Martin Heya who sits as the alternate director to the Energy PS, and chief legal officer Agnes Muthengi. The spaces for chairman and managing director to sign were still blank.

Parliament's Public Investment Committee has been investigating claims that some contracts in GDC had been entered into without the board's involvement.

Stephen Njiru who is the Chairman of the Legal and Regulatory Committee and also a member of the Finance Committee told the Public Investments Committee on 18 March 2014 that Dr Simiyu granted a Chinese company the tender to put up three rigs when the initial tender it won in 2011 was for two rigs. Njiru said the procurement laws were violated.

"We tendered for the supply of two rigs at a cost of 43 million dollars that was duly advertised. Therefore the award of the additional third rig did not follow the laid down regulations as per the procurement laws. The award was also not supported by the board resolution or approval," Njiru said.

However, Simiyu defended the tender decision before the Parliamentary committee saying that the procurement was within the law.

He said that the allocation by the African Development Bank was 70 million dollars and after tendering, they got 43 million dollars as the lowest bid for two rigs.

He said that he went back to the African Development Bank that was sponsoring the project through a grant and loan and were allowed to procure another rig using the money left from the first tender without re-tendering.

"We had not signed the contract for the two rigs so we thought whether we should go back to doing a new tender, or whether we should go ahead and award the two rigs or go ahead and award three. We went back to the bank which gave an approval," Simiyu defended his action

The CEO said that the proposal was well within the rules of African Development Bank Board. He said that the procurement process was overseen by the Bank, which had produced the development money both as loan and grant.

Committee chairman and Eldas MP Adan Keynan differed with the explanation given saying that Public Procurement and Disposal Act should have guided the procurement pre-process.

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