The government lost Sh201 million in the KPLC scandal involving the supply of faulty transformers, a court heard yesterday.
In his opening statement in the case against former MD Ben Chumo and other senior officials, the prosecution said that they will prove the officials looted public funds.
Assistant DPP Alexander Muteti said state has recovered Sh200 million. The recovery was made with the help of investigators.
Those charged with economic crimes alongside Chumo include former MD Ken Tarus, Beatrice Meso, K.P. Mungai, Joshua Mutua, Abubakar Swaleh, Samuel Ndirangu, Stanley Mutwiri, Benson Muriithi, Peter Mwicigi and John Ombui. Also charged in the scandal are directors of MUWA trading company James Mungai, Grace Mungai and John Mungai.
The charges include conspiracy to commit an offence, aiding the commission of a felony, willful failure to comply with procurement laws, conspiracy to defeat justice and fraudulent acquisition of public property.
It is alleged that on diverse dates between August 3, 2012, and June 12, the accused committed economic crimes by fraudulently procuring transformers worth over Sh400 million.
Muteti told senior principal magistrate Felix Kombo that the case presents a classic example of a complex web of conspiracy hatched by skillful, well trained and highly organised schemers.
“It is the new face of corruption and white collar crime in Kenya,” Muteti said.
The prosecution said it will demonstrate that there were cases of nonconformity.
“Correspondence between KPLC and the suppliers show they acknowledged some of the faults identified during the inspection and acceptance,” Muteti said.
Muteti said a one year warranty agreed was insufficient and that KPLC ought to have negotiated a longer warrant period considering the merchandise they had set to procure.
He said there was a common intention to defraud KPLC and that the suspects’ actions were well choreographed to cover their tracks including the institution of a civil suit on a cause of action created by Kenya Power management.
“As a result of the fraudulent scheme, valueless transformer were left lying in KPLC yards yet payments had been made to MUWA,” Muteti said.
Muwa supplied KPLC with 501 transformers as at May 22, 2015. Some 327 failed on installation and had to be repaired.
MUWA sued KPLC upon cancellation of the tender and a settlement was recorded but the details negotiated were not spelt out.
On May 5, 2015, KPLC cancelled the tender because of quality of transformers supplied by PME, shilchar technologies.
The company committed to pay Sh11,300,000 and Sh32,655,440 on account of liquidated performance bond.
Schilar Technologies sought a waiver of factory assessment test which KPLC granted despite concerns about quality “the waivers were meant to aid MUWA Company limited to import substandard transformers
“The management of KPLC while aware of the short warranty period kept the transformers in the yard beyond 1 year, thereby precluding the company from paying any claims based on the warranty since leakages began while consignments were still in the yard.” The court heard.
Muteti said they want maximum penalties for suspects and asset forfeiture.
Earlier, defence lawyers objected to the prosecution’s bid to present an opening statement, saying it was prejudicial.
Muteti said he was allowed to make his opening statement. Kombo dismissed the application by the defence team, saying the opening statement by the DPP had no evidential value and so was not prejudicial to the accused persons.