News

Story by DAVID OKWEMBAH

In the latest chapter of the saga of the controversial purchase of four used Mi-17 police helicopters, the Kenya Anti-Corruption Commission says it is investigating the award of a Sh840 million contract to overhaul the Russian-made aircraft to an Israeli firm that was also the highest bidder.

Ms Catherine Wambui, a KACC spokeswoman, said the organisation had received a complaint from a Russian bidder about the manner in which the tender was awarded to Israel Aircraft Industries. “We received their complaint on March 5, 2007, and we acknowledged receipt of the same in a letter to the complainant,’’ she told Sunday Nation.

But an official Russian source, who asked not to be further identified, said the bidder, JSC Saint Petersburg Aviation Repair Company, had not received the KACC letter and was only informed by the Department of Public Procurement tender committee that it had awarded the contract to the Israeli firm on February 7. The source said the letter arrived after the 21-day appeal period had expired. The source said the US$8.8 million (Sh594 million) bid was significantly lower than the winning Israeli bid of US$12.8 million.

Police spokesman Eric Kiraithe defended the award of the contract to the Israeli firm, which he called reputable, and said the overhaul of the helicopters at the police hanger at Wilson Airport had already begun. However, Mars Group Kenya, the anti-corruption non-governmental organisation, said the overhaul had not begun.

Police barred Sunday Nation access to the hanger. It was not possible to contact anyone at the Russian firm. But the Russian source said because of the late date, the company had written directly to KACC rather than to the Public Procurement Appeals Board.

The procedure is contained in the 2005 Public Procurement Act passed after the uproar over the awarding of contracts to phantom companies, including Sound Day Corporation, which supplied the helicopters to the government in 1998 at an inflated cost of US$9 million each. On April 24, the managing director of the Russian firm, Mr Sergey Artsyman, wrote again to KACC to inform them that the firm had been contacted by unidentified intermediaries seeking to sub-contract the overhaul job to JSC SPARC.

“We do not know what certificates were presented by a company that is not even engaged in Mi-17 helicopter overhaul,’’ his letter, a copy of which was seen by Sunday Nation, said, ‘‘but we are still getting offers from intermediaries for overhaul of helicopters indicated in tender.’’ The award of the tender was raised in Parliament last week by Gachoka MP Joseph Nyagah, but he was brushed aside by Internal Security minister Mr John Michuki who told him to acquaint himself first with the maintenance contract.

On December 8, 2006, a statement in the Daily Nation signed by Commissioner of Police Maj-Gen Mohammed Hussein Ali justified the award of the contract to the Israeli firm on the grounds that its bid had met all 221 specifications. JSC SPARC was listed second as having met 216 specifications. It is not clear why the announcement appeared two months before the contract was signed. Mr Mwalimu Mati, the head of Mars Group Kenya, calls the award to the Israeli firm fraudulent.

“This award is fraud of the highest order and is very risky for Kenyan airspace,’’ he says in an article posted on the group’s Web site. The award of the overhaul contract deepens the controversy over the four helicopters that were described in Parliament as ‘‘old and decrepit’’ by President Kibaki when he was Leader of the Official opposition.

It is not clear why the Moi government did not buy the helicopters directly from the manufacturers rather than going through an intermediary. Investigations in 2005 by the Controller and Auditor General established that both Sound Day Corporation and Apex Finance, which allegedly raised the funds, were phantom companies linked to other fraudulent contracts entered into by the government in what became the Anglo-Leasing scandal.

The helicopters have run into numerous technical problems that either grounded them or resulted in forced landings, once when Vice-President Moody Awori was on board. Mr Mati says the helicopters have cost Kenyan taxpayers approximately Sh4 billion in repairs alone, not including the new three-year maintenance contract.