Chinese firm accused of forgery wins battle for KenGen tender

Tuesday November 28 2017

Geothermal well at Olkaria. PHOTO | FILE

Geothermal well at Olkaria. . PHOTO | FILE 

By SAM KIPLAGAT
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A Chinese company that allegedly presented fake documents in a multi-billion shilling power project tender has won a reprieve after the High Court declined to overturn the award.

A consortium led by Kenyan company H. Young & Company (EA) Ltd, and Yantai Jereh Petroleum Equipment and Technologies Company Ltd, had moved to court challenging KenGen’s decision to award one of the packages of the Sh20 billion Olkaria contract to a consortium of Shangdong Kerui Petroleum Equipment Ltd and Turboden.

The contract entailed the supply of engineering, procurement, construction and financing of geothermal power plants at Olkaria.

The tender committee awarded Package 1 of the tender to Shangdong, the second lowest bidder, while Package 2 was awarded to H. Young, the lowest bidder.

The matter was taken to the Public Procurement Administrative Review Board which board upheld the decision of the tender committee.

Due diligence

The court heard that it was wrong for the board to order KenGen to disregard recommendations arrived at as a result of due diligence conducted to verify documents presented by Shangdong Kerui.

The board was of the view that due diligence was not required given that the evaluation committee had waived the need for power of attorney after all tenderers failed to provide them, save for Shangdong.

H. Young had pointed out that due diligence conducted by KenGen had discovered that the power of attorney by financiers of Chinese company ICBC was signed by a person not listed as the president or chairman of the bank on its website.

The court heard that Section 176(1) of the Public Procurement and Asset Disposal Act 2015 prohibits any person from knowingly lying or misleading a person carrying out a function under the law.

It was the contention of the Kenyan company that the board should have cancelled Shangdong’s tender because the law prohibits presentation of fraudulent documents.

'Unjust manner'

By awarding the tender, the board was not only condoning and encouraging an illegality but was also acting in an unjust manner, H.Young argued.

The board, however, said the company had failed to demonstrate how its decision was outside the scope of the law governing it.

The Chinese company, for its part, argued that the tender was open and free for all bidders, whether local or foreign.

It further argued that the process was conducted within the purview of the law.

In his decision, Justice George Odunga found that the board had noted that the financial institutions supporting various submissions of tenders did not provide powers of attorney but letters of intent instead.