Nairobi — Procurement greed at the Kenya Revenue Authority (KRA) might rip off taxpayers' money following their move to re-advertise tender on excise duty stamps with no existing gaps.
Details have emerged that taxpayers procured Excisable Goods Management System in 2015 for Sh 2.5 billion under a five-contract between SICPA SA of Switzerland and Kenya Revenue Authority.
In the terms of the agreement, the Swiss firm which procures stamps for alcoholic drinks, beverages, and tobacco was supposed to come to an end in November 2022 with KRA taking ownership of the system.
Revelations made by the company officials before the Public Investment Committee for Commercial and Energy, however, showed that the money to procure the system is on the verge of being lost if KRA terminates the contract.
"As far as we are concerned, we were just following the contract. On our side, nothing was done wrong. You should just ask KRA why they advertised the expression of interest," said Chief Commercial Officer Gianni Santoro.
Pokot South MP David Pkosing who chairs the committee questioned the existing gaps that propelled KRA to float the tender after a ten-year stint with the Swiss Firm.
"Why did KRA do that, did they find a gap in your system and therefore you are doing it? Did you have any assessment, my understanding is that you evaluate a system for the 10-year period, do an assessment, and say these are the reasons we are going for a new system," said Pkosing.
SICPA Chief Commercial Officer told MPs KRA raised no issues during the implementation of the contract that pointed out any inconsistencies or dissatisfaction.
"The contract was implemented to the full satisfaction of KRA, the performance indicators between SICPA and KRA indicate the issues. We have no clue why the tender was advertised," said Santoro.
EGMS System
Eyebrows were raised on the move by the taxman to advertise an expression of Interest for a new system, therefore, discarding the EGMS System which is already acquired through the 2015 Contract.
Questions have lingered on whether terminating the contract with SICPA or initiating a new contract with a different contractor will save taxpayers money.
This is after it emerged that despite the contract agreement stating that the equipment owned by the Swiss Firm will be transferred to KRA, the tax collector has no capacity to run.
"The ownership of the equipment will be transferred to KRA but whether another company will be able to use the equipment the answer is no because other companies have different solutions which are different from ours," Santoro said.
Laikipia West MP Mwangi Kiunjuri poked holes in the contractual agreement alluding that the contract was suspicious and might have been propelled by powerful forces in the previous regime.
"How can you own something that you can't be able to use tomorrow? If you leave it with me how can I be able to operate it? If they will not renew it, what purpose will the machine offer?" posed Kiunjuri.
Kasarani MP Ronald Karauri added: "Does SICPA have an unfair advantage on this tender because if they hand over the system to KRA, will another company be able to manage it. It means that SICPA has held KRA hostage to award them the tender moving forward."
Handover Fix
The Swiss Firm however argued that the technicalities of a security contract force them to run the system even after the termination of the contract saying due to the security features it can't be taken up by another entity.
"Yes, it needs to be serviced by SICPA and run by us otherwise you lose the purpose of the system because it becomes hopeless because you lose the security just," Santoro said.
The Swiss Firm said that no feasibility study has been carried out to determine the motive to terminate the contract.
SICPA affirmed that the taxman delinking from them will have a ripple effect which might cost taxpayers.
"I would expect the cost to be higher because over the years we have built knowledge, systems, and solutions which know extremely well how the system works in Kenya. My personal opinion is that I would expect the system to cost more," Santoro said.
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Pokot South MP implied that tender wars might be at play to push for the termination of the contract with taxpayers bearing the brunt.
"People might be wanting to kick off SICPA and get an opportunity to rip off Kenyans three times. We don't know, so we need a comparison so that the people of Kenya can make informed decisions," Pkosing stated.
On corruption allegations, SICPA had denied the allegations saying it was sanctioned for organizational deficiencies.
"There might be revenue leakages in the system through EGMS because when I go back to the issue of criminal culpability according to the laws of Switzerland. If the tender was advertised in Switzerland would you still be shortlisted?"Karauri posed.
The Swiss Firm defended itself saying it fully exonerated the organization from corruption allegations and the Office of the Attorney General in Switzerland only imposed a fine on them.
"We have never been sanctioned on corruption allegation, all the cases against us were concluded and we were found not guilty," Santori said.
