Kenya

Chinese firm bribed to win tender for mall, says EACC

Chinese firm bribed to win tender for mall, says EACC
  • The anti-graft watchdog has now fingered former LBDA board members George Nichodemus and Innocent Obiri as some of the beneficiaries of the racket.

  • The revelation has been made in a court case Erdemann directors Zeyun Yang and Zhang Jing filed, seeking anticipatory bail.

Chinese-owned Erdemann Properties Ltd bribed Lake Basin Development Authority (LBDA) board members with cash and houses to secure a contract for a Sh2 billion mall in Kisumu, anti-graft detectives have said as they look to arrest the real-estate firm’s officers in relation to the scandal.

The Ethics and Anti-Corruption Commission says it uncovered a bribery racket in LBDA, which saw Erdemann Properties inflate the construction costs for the Lake Basin Mall to cater for kickbacks in return for the lucrative contract.

PROCUREMENT LAWS

The anti-graft watchdog has now fingered former LBDA board members George Nichodemus and Innocent Obiri as some of the beneficiaries of the racket.

The revelation has been made in a court case Erdemann directors Zeyun Yang and Zhang Jing filed, seeking anticipatory bail as EACC ponders charging them for colluding with LBDA officials to violate procurement laws at the taxpayers’ expense.

High Court Judge James Onyiego dismissed Erdemann’s application and ruled that arresting the two Chinese nationals will not violate their rights.

He added that Kenya’s laws have remedies for individuals who feel they have been unlawfully arrested without adequate evidence.

In its response to Erdemann’s case, EACC held that Erdemann paid Mr Nichodemus Sh12.4 million in two instalments on May 2 and December 11, 2013.

The anti-graft watchdog added that Mr Obiri received Sh2.3 million from Erdemann on May 2, 2013.

The EACC had earlier revealed Mr Obiri’s alleged benefit in a lawsuit the Bobasi MP filed to stop his arrest.

Kisumu County Assembly Speaker Onyango Oloo had earlier been accused of receiving a house in Athi River as a kickback.

SEVERAL IRREGULARITIES

Government valuers say the mall is worth Sh3 billion, an indication that costs could have been inflated by Sh1.2 billion.

More than 20 EACC detectives raided the houses occupied by Erdemann’s directors on July 4 and collected what could constitute evidence in the event that the Chinese nationals are arraigned.

“The contractual sum was unlawfully inflated, with the Mr Yang’s and Mr Zhang’s company failing in crucial stages but was, nevertheless, awarded the contract after unduly influencing the board members. Contrary to the applicants’ averments that the project was passed by the Attorney-General, the Attorney-General’s legal opinion dated December 5, 2016 revealed several irregularities in the award and execution of the tender,” EACC told the court.

“The cost of construction was inflated to take care of the gifts given to the board members by Erdermann inter alia; houses and money which induced the board to disregard necessary procurement procedures.”

The Chinese nationals claimed that their staff have been harassed since 2015 in the name of investigations, and that they had earlier recorded statements in relation to the mall.

But Justice Onyiego held that mere fear of arrest is no reason to grant anticipatory bail.