NCPB, a citadel of corruption: How Sh297m vanished

For their part in the intricate web of deceit, both Waluke and Mrs Wakhungu were asked to pay over Sh1 billion each in fine or rot in jail for many years.

Interestingly, they only received a paltry Sh90 million out of the NCPB’s Sh297 million heist, and now there are queries on why the unnamed beneficiary of the bulk of the money is still roaming free. There were also bankers and lawyers who had been waiting for the money.

The distribution was so tense that, at one point, Jacob Juma is said to have whipped out a pistol and brandished it on city lawyer Protas Saende demanding his share. That was according to Mr Waluke.

UNANSWERED QUESTIONS

In the underworld of tenders, are multiplicity of cases, courtroom and boardroom wars — and when something goes wrong: death.

The inside story of the NCPB heist has all the elements of a thriller and many unanswered questions.

If Juma, indeed, got the bulk of the money, where did he take it? According to Waluke — and he told the court so — the NCPB deal led to a falling out between Juma and “big people” and that “it is possible that his death had everything to do with this case”.

By the time Juma died, he was penniless. In the documents filed in court, the Ethics and Anti-Corruption Commission (EACC) have not identified Juma as a beneficiary of the NCPB cash, which raises more questions about the unnamed beneficiary.

“Waluke and Wakhungu are small tadpoles in that game. There is the big fish and that is where the story is,” an investigator averse with the case told the Nation.

Court documents are now revealing more players who were involved in the NCPB saga than was previously known to the public, revealing the complicated web that was laid down by the trio of Juma, Waluke and Wakhungu.

CONTROVERSIAL TENDER

The Nation has now found out that the chief EACC investigator, Kipsang Sambai, had also recommended that advocates Joshua Nyawara and Nancy Baraza, a former deputy Supreme Court president, be charged with fraud.

The two were involved in the arbitration process with Mr Nyawara appearing for NCPB. While Ms Baraza only received Sh5 million for her legal fees, it is not clear why the investigator wanted Mr Nyawara charged.

The court was told that when Erad Supplies won the controversial tender, it had already identified Ropack International as their supplier but the NCPB Managing Director, Tirop Kosgey, asked them to purchase maize from Louis Dreyfus, the Swiss commodities supplier, saying that “a powerful person had imported the maize, which was in high seas and were looking for any tenderers to buy the maize”.

That also raises questions on the tendering processes at NCPB and how powerful wheeler dealers corrupted the maize-purchase process.

‘POWERFUL PERSON’

Interestingly, Mrs Wakhungu did not reveal the “powerful person” who ostensibly had maize in the high seas.

What we know from her evidence is that she was introduced to a Mr James Wald, who was the contact person for Louis Dreyfus, powerful agricultural-trading giant headed by Russian-born billionaire, Margarita Louis-Dreyfus.

Mr Wald did not testify in the Nairobi trial and neither was he approached to write a statement. He was said to have relocated to Dubai from South Africa when Pretoria investigator Andries Christoffel went to look for him. Perhaps, Mr Wald would have helped unmask the powerful person who had the maize in the high seas and which NCPB wanted Erad Supplies to purchase.

It was Mrs Wakhungu’s evidence that she met Mr Wald after the NCPB MD advised her to go for Dreyfus maize.

FAKE INVOICES

Another player into the saga was a man named Chiko Slanders, now known to be the person who organised for Juma to get the fake invoices from both Ropack International and from Chelsea Freight.

Apart from Mrs Wakhungu – and perhaps Juma – nobody else seems to have dealt with Chiko Slanders and efforts to trace him in South Africa failed.

He was said to have left for Hungary. Mr Slanders is said to have introduced Chelsea Freight to Mrs Wakhungu and the South African company to ship the maize from Ethiopia to Mombasa via Djibouti.

It was mainly Juma who was dealing with these contacts, according to Mrs Wakhungu.

DOLLAR BUSINESS

The trail of lies ended after detectives traced Freddy Chetty, a native of Durban, and who is director of Chelsea Freight, together with Thilogan Pillay and Leon Alfred Maynard.

It was Chetty who told the Nairobi court that the invoice tabled by Erad did not emanate from their company and that they were not involved in storage business.

Although the invoice had their address, he told the court that the details bore their Rand bank account details, which they could not use to transact a dollar business. Also, they do not deal with maize.

Chelsea freight was known locally and had been used by KPLC to transport poles to Kenya.

Another entrant into the scheme was Nairobi businessman Sundip Jagdish Patel, whose friend, Ms Brenda Koech, introduced him to Mrs Wakhungu.

MONEY TO WIN TENDER

Mr Patel told the court that he was told that Mrs Wakhungu “needed money to win a tender with NCPB for the supply of maize”.

It was his evidence that he advanced her Sh11 million and it is not known who was paid that money to get her “win” the tender, since all the tender committee officials maintained that Erad Supplies award was above board.

It’s interesting that out of the five firms which were awarded the tender, only two performed the contract while three, including Erad, did not supply the maize.

“There was no fraud in the tender evaluation process,” said Mr James Boit, a Business Development manager and a member of the tender committee.

It now appears that neither Erad nor its directors had the capacity to supply the maize and, by approaching Mr Patel, they gave him a sweet deal if he could secure a US$1 million bid bond for them.

Mr Patel drove to Giro Bank, where the manager told him they had no capacity to issue a bid bond of such magnitude.

BID BOND

Mr Patel then turned to I&M Bank, where he applied for the bid bond in the name of his now defunct company, Kapu Kenya.

The I&M Bank CEO Arun Shankar Mathur issued him with the bid bond after he saw the contract between Kapu Kenya and Erad.

The agreement was that Mr Patel would get 50 per cent share of the income from the maize tender.

In total, he told the court he had spent Sh15 million on the trust of his friend Brenda Koech and the personal cheques that were given as security by Mrs Wakhungu.

Mr Patel would later sue Erad Supplies, demanding to be paid Sh150 million being half the amount awarded in the arbitration.

He was also demanding a refund of the Sh15 million which he had invested in the joint venture during the processing of the tender.

Having secured a bid bond, the trio of Waluke, Juma and Wakhungu now required a performance bond, which they sought from I&M Bank through Mr Patel. But Mr Mathur declined.

DUBAI BANK MANAGER

As a result, Juma, Wakhungu and Waluke approached Hassan Zubedi, managing director of the now-collapsed Dubai Bank, and asked for a performance bond. Interestingly, they entered into a profit-sharing agreement at the ratio of 50:50, meaning that if they paid Mr Patel 50 per cent of the income, and Mr Zubedi 50 per cent, they would not make a coin.

Either, somebody was about to be conned and the court observed this.

“If both contracts were to be reinforced, it means that the caused persons had given up to 100 per cent of the profit out of the business, they were left with no profit to share,” noted Chief Magistrate, Elizabeth Juma.

LETTER OF CREDIT

But without knowing that Juma and his group had signed another contract with Mr Patel, Dubai Bank undertook to pay NCPB USD932,000 in the event of default. Mr Zubedi also claimed that he gave Juma, Waluke and Wakhungu a loan of Sh50 million, which was not repaid. This means they had received a total of Sh65 million from both Mr Zubedi and Mr Patel.

By the time they were hunting for these documents, NCPB claimed to have exhausted its vote to purchase maize and thus it did not issue any letter of credit, triggering the running battles with Erad Supplies, which was claiming to have purchased the maize — and that chance to deliver had been denied since NCPB had failed to issue them with the requisite letter of credit.

The EACC investigator had actually found that Erad Supplies “even if it was not supplied with a letter of credit, had no financial capacity to perform the contract”.

When they were asked by Mr William Kipyegon Korir, the NCPB officer in charge of coordination of importation and export of cereals to avail the details of the vessel which was to ferry the maize and to indicate where it will dock at the port of Mombasa — Erad failed to provide the evidence.

MAIZE FROM ETHIOPIA

But still, they claimed to have obtained 40 metric tonnes of maize from Ethiopia through Djibouti at a contract sum of US$180 per metric tonne and was to sell it to the NCPB at USD229 per metric tonne.

Thus, they had anticipated to make a profit of USD1.96 million. Juma had also written to NCPB, claiming that Chelsea Freight of South Africa had charged them storage charges of USD1.15 million after it stored the maize for 123 days.

This is the time he got the invoices, ostensibly from Chiko Slanders, to fortify his case.

It was with these invoices from Ropack International and Chelsea Freight that Erad Supplies managed to convince the arbitrator, Evans Gaturu, who granted them damages totalling to US$ 3.1 million. That was on July 7, 2009.

Interestingly, neither Mr Waluke nor Juma appeared during the arbitration, allowing Mrs Wakhungu to appear with two fake invoices from Ropack International and Chelsea Freight.

Did Juma deliberately give Mrs Wakhungu the two invoices? In court, she said she saw them for the first time during arbitration but later said it was sent to her via DHL.

RUSH TO HIGH COURT

When this award was made, both parties rushed to the High Court with the NCPB seeking to set aside that award and with Erad seeking to enforce it.

It was during the hearing that Justice Leonard Njagi allowed the award, but struck out interest on costs.

The NCPB argued that since “the arbitrator admitted having been approached by the respondent’s (Erad) directors to rule in its favour (he) ought to have resigned.”

But Mr Waluke, while admitting to have met the arbitrator, said they discussed his election petition, after he was referred to him by lawyer Katwa Kigen.

“Other complaints by the Board were that the arbitrator was openly biased and did not consider its case in the award,” the Court of Appeal observed. NCPB had two parallel cases in court. The first was to stop the execution of the award and the second was to set aside the arbitral award.

GROUNDS OF APPEAL

Having lost the case to set aside the award, before Justice Leonard Njagi and Justice George Odunga, NCPB rushed to the Court of Appeal in early January 2012.

The grounds of appeal are that Justice Njagi “did not comprehend the nature of the application… and had failed to appreciate that the award involved public funds for which public policy demands proper accounting”.

They were of the view that the Judge should have reopened and re-evaluated the evidence as the award sanitised theft of public money and that the award “smacked of mischief, corruption and theft of public funds”.

But one of the issues raised was that NCPB had failed to file a notice of appeal, in order to be heard.

This failure would fatally injure their case at the Appeal Court and that is the time that the Adan Keynan-led Parliamentary Investment Committee entered the fray and started investigating Juma’s business with NCPB.

At one point, Mrs Wakhungu said she was a victim of “political fights” while Mr Waluke told the court that the PIC Chairman instigated the case due to the differences the two had as members of PIC.

‘BOSSY’

He also blamed the case on Brian Yongo, who said he was the one who lodged a complaint to the PIC. It now appears that within Erad, Juma was actually the guru.

“He was bossy and took advantage of Mrs Wakhungu,” Mr Waluke told the court.

Mrs Wakhungu told the court that Juma dictated the amount each was to be paid. After she received her Sh40 million, she paid Sh6 million to Sundip Patel and Sh7.5 million to Brian Yongo — a smooth talker who claims to be a debt collector.

If that is the case, Mrs Wakungu only received Sh26.5 million, which was a pittance to the person who was running the company. But why she had to pay Mr Yongo — the person who took them to PIC — is not clear.

QUANTIFIABLE MONEY

Mrs Wakhungu told the court that while Mr Waluke was paid Sh50 million, Juma paid himself Sh100 million perhaps because “he was an integral part of the transaction.”

Juma was never interrogated about this saga as he was murdered in 2016 when the investigations were ongoing.

It was Mr Waluke’s evidence that this assassination had something to do with this case.

Interestingly, neither Ropack International nor Chelsea, said in Juma’s letters to be pestering Erad Supplies for payments, received a coin from the Sh297 million transferred from NCPB accounts to the Soita and Saende advocates bank account.

“Jacob Juma was good at the legal work and the follow up on payments,” Mrs Wakhungu had told the court.

According to Mr Waluke, it was Juma who “messed” the distribution of the initial payment and that from the “outstanding balance of Sh400 million” they expected to pay the supplier, Chelsea Freight.

NAIROBI LAWYER

Besides the money taken by Juma, Mr Waluke told the court that Nairobi lawyer Ahmednasir Abdalla “ought to have been charged for the moneys he received”.

The lawyer received Sh45 million as legal fees.

But the Chief Magistrate, Elizabeth Juma, appears to have closed the question, saying: “The financial transfer between the advocates and the accused persons appears to have been mutual, as the claimants and Erad directors cannot escape… they are therefore found liable and responsible for their actions as the principal for the full action and conduct of the advocates as long as it is not a question on the professional conduct of the matter.”

What the magistrate was saying was that those who produced a fake invoice would be held liable for the full quantifiable money lost by NCPB.

He also claimed to have been told by Mr Saende that Juma had threatened him with a gun to effect the distribution of the money.

Some of the money was withdrawn in cash and nobody seems to know who was paid.

But it is the fate of Sh112 million that is raising queries since EACC has not followed that.