Several senior Kenya Ports Authority (KPA) managers will face disciplinary action, including being forced to refund money lost, over several tender malpractices in the organisation, which saw its managing director leave last week.
A KPA Board Audit and Risk Committee report prepared on March 18, obtained by the Nation, shows that managers in the finance, procurement and engineering departments have been asked to explain several malpractices which has seen the organisation either bleed money, leading to losses amounting to billions of shillings.
Last week, the authority's former MD, Dr Daniel Manduku, resigned, and was replaced by the agency's General Manager for Engineering, Mr Rashid Salim, in an acting capacity.
But the report also fingers Mr Salim's department as having been part of the tender mess that could have cost the authority over Sh2.4 billion.
Documents indicate that the engineering department had a budget overrun of about Sh1.5 billion on repairs and maintenance in the first quarter of 2019/2020.
This was revealed by an audit ordered by the board for a review of the agency's repairs and maintenance account between July 2018 and December last year.
The KPA board now says it is "concerned about the issues since they amounted to circumventing set processes and the Public Procurement and Disposal Act, 2015", and has directed that appropriate disciplinary action be taken against the responsible officers.
The audit also revealed that the Engineering departments overshot its repairs and maintenance budget for the period July and December 2019 by a whopping Sh3.3 billion, from its budgeted Sh380 million, to an actual expenditure of Sh3.72 billion.
This saw the board take to task Dr Manduku, the port's head of civil engineering, and the acting head of procurement. The port's general manager, finance, has since been asked to explain "why budget locks are not implemented in the SAP accounting system," to avoid the loss of funds.
The board's report also shows that KPA's Internal Audit Department had carried out an audit of the draft financial statements for the period ended December 2019, and found that the agency had overrun its budget by Sh2.3 billion, spending Sh21.42billion instead of the planned Sh19.1 billion.
The KPA management told the board that they were at an "advanced stage to bring on board budget locks by the end of April 2020." However, the board's committee recommended that the "management institute disciplinary action on the affected vote holders for this overrun."
The audit also revealed a growing number of debtors, with the authority's trade cargo debtors owing Sh4.01 billion as at the end of last year, compared with Sh3.6 billion in the first quarter ending September last year, representing an 11.28 per cent increase.
This means the authority is offering more services without getting paid, which the board has picked.
In its defence, the KPA management said that the growth in debts is attributed to the growth in business, adding that the agency had reduced the outstanding balance down to Sh2.11 billion as end of January this year.
The management was also been put on the spot for advance payment of Sh60 million to supplier's, contrary to the terms of the contract.
The money was paid to three travel agents, Kilindini Travel Centre, Regal Tours and Travel, and Helinas Safaris without any approval, and the provision was not covered in the contract terms. The board wants disciplinary action taken against the staff who circumvented the process.
The audit also revealed that Zara Travels did not bid to provide air travel, yet it was engaged to offer the services.
According the report, Tender No. KPA/159/2015-16 for the Provision of Air Travel Agency Services had 14 bidders, four of which were awarded as per Memo No. 121-005/2015-16. Zara was among these firms, and KPA noted that it was given the job "by the virtue of being under preference groups."
Another scam involved items listed in the bill of quantities, which auditors could not verify on the ground.
"Two items included in the Bills of Quantity for the proposed renovation of Bus Terminus washrooms LPO. No. 4500080332 dated 22nd October 2018 amounting to Sh1.1 million could not be verified on the ground, yet payment was made in full," the report said, prompting the board to call for disciplinary action, including instituting surcharges on the acting head of procurement, the general manager, Finance and Infrastructure Development, over the scam.
It also emerged that KPA is yet to collect Sh512 million from shipping companies, with Sh474 million owed by 15 companies. But the KPA management said in January that it had managed to collect Sh81 million, resulting in a balance of Sh393 million at the start of February this year.
"The amount outstanding relates to disputed invoices mostly on stevedoring, Port convenience movement and idle gang charges. Sometimes these cases take long to resolve and largely emanate from manual and semi-automated billing processes at marine operations," it told the auditors.
The board has since tasked the agencies' Head of Marine Operations and Head of Financial Accounting to review its list of Marine Debtors and come up with strategies of clearing the outstanding balance.
The audit committee also flagged unreconciled ledger accounts for the second terminal suppliers, which showed that it had 11 debit entries totalling Sh4.2 billion, and five credit entries of Sh2.6 billion dating back to 2016 with no corresponding entries.
Also flagged was the Lamu Port Project suppliers account, which had a total of 18 debit entries totalling Sh7.5 billion, and seven credit of Sh3.2 billion between 2014 and 2018, with no corresponding entries.