Sirisia MP John Waluke
Sirisia MP John Waluke and his business
associate Grace Sarapy Wakhungu forged documents to show that they
stored maize in a South African warehouse as part of a ploy to justify a
Sh500 million claim from the National Cereals and Produce Board (NCPB)
in a 2004 scandal that haunts taxpayers to date.
Following an acute shortage of maize that year, NCPB floated a tender for the provision of 180,000 tonnes of white maize.
COUNTER-CLAIM
Erad
Supplies & General Contractors Ltd was contracted to supply 40,000
metric tonnes at $229 per tonne and was obliged to ship the maize to the
Mombasa port within four weeks from the date of signing the contract.
But
a dispute later arose between NCPB and Erad. Ultimately, no maize was
delivered and Erad referred the disagreement to an arbitrator.
NCPB,
through lawyer Patrick Lutta, argues that using these forged documents,
the two business partners, who are directors of Erad, were able to
successfully argue an arbitration case against NCPB, and were awarded
$3,106,000 (Sh311,184,072.50) in 2009.
This included $1,960,000 (Sh196,378,641) on
account of loss of profit, and $1,146,000 (Sh114,861,580) on account of
storage costs due to the supplier, as well as interest at 12 percent per
annum with effect from October 27, 2004, along with the costs of the
arbitration proceedings.
The arbitrator also dismissed NCPB’s counter-claim, in the total sum of $71,006,549 (Sh7,113,097,436).
GARNISHEE ORDERS
NCPB,
which is supporting requests by the Ethics and Anti-Corruption
Commission (EACC) and the Director of Public Prosecutions (DPP) to have
Mr Waluke and Ms Wakhungu prosecuted for graft, said the two proceeded
to demand and recovered over Sh314 million from it on the basis of the
award.
“Mr Waluke and Ms Wakhungu
executed the arbitral award and recovered over Sh314 million from NCPB
after attaching and selling its assets and obtaining garnishee orders
against its bank accounts,” Mr Lutta says.
EACC
investigations locally and abroad — made possible through Mutual Legal
Assistance (MLA), an arrangement where the State requests the government
of another country to help it obtain evidence — has established that
the procurement process and alleged purchase and storage of 40,000
metric tons of white maize was a well-orchestrated fraud by Erad’s
directors.
EACC wants Mr Waluke and
Ms Wakhungu prosecuted for graft, saying that investigations had
established that Erad used an invalid tender security bid and ought not
to have been technically evaluated as responsive. “The firm also
procured the award fraudulently by means of false testimony and forged
documents,” says EACC in court papers. Mr Waluke and Ms Wakhungu,
through lawyer Nelson Havi, are seeking to stop their prosecution,
arguing that the evidence being relied upon to justify their prosecution
was adequately dealt with during arbitration, and that it had also been
rejected by the Court of Appeal.
DOCUMENTS
NCPB,
for its part, says EACC has the legal mandate to carry out
investigations including issues relating to the claim by the two
business partners arising out of the arbitration award.
“Mr
Waluke and Ms Wakhungu will have an opportunity to defend themselves at
the trial and clear their names,” said lawyer Lutta, for NCPB.
EACC,
through lawyer Ben Murei, states that Erad alleged that it had made all
arrangements to bring maize that had been procured and stored by M/S
Chelsea Freight, South Africa, for a period of 123 days but that NCPB
failed to meet certain conditions and hence it could not import the
maize.
It was this testimony that
resulted in the arbitration award, including storage charges of
$1,146,000 purportedly paid to M/S Chelsea Freight.
Pursuant
to MLA, EACC obtained evidence from South African authorities
demonstrating that the documents purportedly emanating from firms in the
country on the basis of which huge awards were made were forgeries.
“In
particular, one of the documents (an invoice) on the basis of which
storage charges of $1,146,000 were awarded to Erad and its directors, is
forged and did not emanate from the purported supplier, M/s Chelsea
Freight in South Africa,” EACC says in court papers. The hearing of the
case has been set for March 11.
DAILY NATION
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