Records of some of the entities believed to have been fraudulently paid Sh9 billion from the National Youth Service are incomplete or missing from the company registry.
A search in the official database of the registrar of companies carried out at 4pm yesterday showed that Ameratrade Enterprises, Ngiwako Enterprises, and Ersatz Enterprises returned a "no result".
"When a search of a company at the official register done manually returns a "no result", it means as far as the companies' registry is concerned, those companies do not exist," an official at the registrar's office, aware of the goings on, but who is not authorised to speak to the media, said.
In a few cases, efforts by the Nation to unmask the owners of the entities yielded identities of directors whose names are not familiar to the public, but who are possibly fronts for people holding influential public offices.
Out of a sample of 10 companies, three were properly registered as companies with two directors each, two were registered as business names with one owner each, while three could not be traced at all at the company registry. About 40 companies are said to be involved in the NYS fraud and are under investigation.
The Nation worked with a sample of 10 of the companies under investigation. At this point, there is no insinuation of guilt, merely that the transactions are under investigation.
The government and its agencies are supposed to do business only with formally registered companies, which must also be registered as taxpayers and have a PIN certificate as well as a VAT certificate. In the case of women, youth and the disabled, they must have an additional certificate, called AGPO (Access to Government Opportunities). In addition, all must have a tax compliance certificate.
The incomplete records fit an established pattern in corruption scandals and raises serious questions about the company registry, under the Attorney-General, to ensure transparency in business.
The difficulties in establishing the ownership of the companies came amidst a strong fightback, led by the Consumer Federation of Kenya (Cofek), in which the director-general of the National Security Intelligence, Maj General Philip Kameru, was accused of orchestrating the investigation in cahoots with former acting NYS director-general Sam Michuki, a senior official at NYS whose exact position remains clouded in confusion. He was appointed acting director on Janury 8, 2016 by Principal Secretary Lilian Mbogo-Omollo.
Bizarrely, on January 11, 2016, he was reported in the press as having been appointed the substantive director-general to replace Ms Clare Lwali Chaddah, who had acted in the capacity since the departure of Nelson Githinji. However, three days after the announcement of Mr Michuki's appointment, Mr Richard Ndubai was sworn in as the director-general.
ABUSE OF OFFICE
Ms Chaddah was transferred to the Ministry of Sports and subsequently charged with abuse of office in connection with the first NYS scandal. She was acquitted two months ago. Mr Michuki was senior director in charge of the Kibra slum upgrading project but was reported to have been removed by Anne Waiguru.
However, he is still reported to be a deputy senior director in charge of administration. Other reports indicate that he was transferred to the Ministry of Transport.
It is unclear whether there is any substance to these allegations, or whether they are part of a game of smoke and mirrors as corruption fights back, as it often does.
But Director of Criminal Investigations George Kinoti was on Tuesday bullish, warning top NYS officials that they will not be spared if found to have stolen money from the organisation.
"Kenyans should anticipate arrests of all those who are culpable," said Mr Kinoti. "People will be arrested and taken to court irrespective of the ranks they hold or their social status. If you misused public funds and diverted the money for personal use, you be held accountable. We shall not leave you alone."
He said he had assembled a team of detectives from the Investigations Bureau based at Mzaingira House, the directorate's headquarters, to probe the scandal.
"I can assure that my officers will not be intimidated. The culprits will be treated just like any other criminal. These are economic gangsters. They are causing more problems than armed gangsters," added Mr Kinoti.
He also said that the detectives are scrutinising documents from all NYS departments, in Nairobi and other parts of the country, after which those suspected of misdeeds will be summoned to give their side of the story.
While the Nation is not alleging wrongdoing on the part of the entities whose records it sought, the Directorate of Criminal Investigations has been digging into whether the law was followed in the award of tenders to them at NYS, and whether they supplied any goods against which they have been paid.
Annwaw Investments, Kunjiwa Enterprises, and JerryCarthy Enterprises, according to the search, are only listed as business names, and not companies. Of interest to the investigators is how an entity not registered as a company won a tender at the NYS. Annwaw has listed itself as involved in supply of stationery, JerryCarthy deals in general supplies, and Kunjiwa trades in foodstuff.
Of the nine the Nation searched, only Firstling Supplies, which has already been paid Sh1.3 billion, Calabash Investments, and Arkroad Holdings Limited are listed as companies at the registry, complete with their physical addresses and directors.
The directors of Firstling Supplies are listed as James Thuita Nderitu and Yvonne Wanjiku Ngugi, with the former being the majority shareholder. Arkroad Holdings Limited has Peter Wagurah Kimani and Anthony Makara Wamiti as directors with equal shares.
Calabash Investments, on the other hand, has Maureen Nyakerario Monyoncho as the majority shareholder and Evans Mokaya Omwenga as the minority.
According to investigators' understanding of what transpired, corrupt officials created companies then assigned them contract numbers ordinarily given to contractors pre-qualified by the Department of Public Works. Whereas the contract numbers were valid and the pre-qualified companies genuine, the dummy companies were basically shells created to facilitate fraud.
Using a valid contract number, an account could be opened for the shell companies in the Integrated Financial Management Information System (IFMIS).
Local Purchase Orders (LPOs) were then raised in respect of the dummy companies and the impression created that they had supplied goods to NYS. The fake payments were slotted into the NYS stock of pending bills.
While NYS has pumped billions into fake entities, the Nation has learnt that genuine suppliers are facing ruin as auctioneers descend on their property.
The worst affected are those who obtained bank loans on the strength of LPOs issued by NYS but the latter has not paid, years later.