Suspended Treasury Cabinet Secretary Henry Rotich and his former Principal Secretary Kamau Thugge violated the Insurance Act when they paid Sh11 billion upfront to an Italian insurance company, SACE, to insure the construction of Kimwarer and Arror dams, it has emerged.
BANKRUPTCY
This comes as Directorate of Criminal Investigations (DCI) boss George Kinoti confirmed Tuesday zeroing in on how the insurance company was procured by Treasury mandarins.
According to Mr Kinoti, the mandarins claimed that CMC di Ravenna, another Italian firm contracted to build the Sh63 billion dams, bulldozed its way against Kenyan laws to have the insurance component of the two dams awarded to SACE.
“They (Treasury) have told us that CMC di Ravenna insisted that the insurance be handled by SACE,” Mr Kinoti said.
The payments were made notwithstanding the fact that a government guarantee, at no cost, would have been enough for the dams project.
Mr Rotich and Dr Thugge have already been charged in court over multiple counts including abuse of office, conspiracy to commit an economic crime, approving advance payments towards the construction of the two dams contrary to the law.
As at January 2019, the government had released Sh19,714,366,991 in advance payment, commitment fee, insurance and other costs to the two foreign companies for zero work done.
Curiously, the Treasury officials awarded CMC di Ravenna the construction tender, well aware that the firm had successfully filed for bankruptcy proceedings back in Italy.
POLICY DOCUMENT
Other than Treasury, the payment of Sh11 billion to SACE in insurance security puts the Insurance Regulatory Authority (IRA) in a tight corner over whether its opinion was sought before the money was released and whether there exists a policy document that will make it easier for the government to claim the monies.
Treasury opted to have insurance security in form of a policy bought from SACE well aware that section 20 of the Insurance Act had been amended in 2017, through a Statute Law (Miscellaneous Amendment) Act.
The essence of the amendment was to have IRA, which falls under Treasury’s docket, educate the public regularly on the right to independently select an underwriter (insurer) or broker from a list of underwriters or brokers it has licensed from companies registered in Kenya in line with the Companies Act. The law prohibits any person from procuring insurance services outside the country without the approval of the IRA, which regulates the conduct of the insurance industry in the country.
IMPRISONMENT
It further provides that the Commissioner of Insurance shall advise the government on the national policy to be followed to ensure adequate insurance protection and security for national assets and properties.
A person or entity that contravenes any of the standards of conduct of insurance and reinsurance business in Kenya risks a fine not exceeding Sh5 million or imprisonment for a term not exceeding five years or both.
The law further provides a leeway that if any doubt arises — whether insurance premiums should be paid in Kenya or outside the country — the Commissioner of Insurance shall decide the question and his decision shall be final.
Whether IRA approved the procurement of the Italian insurance firm, whether it is registered in its home country and if it has a local office, and whether there exists a policy document, is now a matter to be unravelled by the DCI.
