Kenya Pipeline Denies Graft as Directors Are Suspended

(Bloomberg) -- Kenya Pipeline Co. denied any corruption at the state-owned company as it suspended three officials to allow an investigation into alleged malfeasance to proceed.

President Uhuru Kenyatta is mounting his administration’s biggest campaign yet to tackle graft in Kenya, which ranks among the world’s most corrupt countries. On Monday, he ordered the suspension of procurement and accounting officers at all government-owned institutions as the authorities probe a scourge he’s previously described as a threat to national security.

Kenya Pipeline suspended its general manager for finance and two directors in its procurement department, even though no money has gone missing from the company, Managing Director Joe Sang told reporters Tuesday in the capital, Nairobi. The Daily Nation newspaper reported earlier that as much as 95 billion shillings ($940 million) of taxpayer funds had disappeared from the company.

“We find these allegations quite inaccurate, astonishing, maliciously constructed to injure Kenya Pipeline,” he said. “No money has been lost by Kenya Pipeline.”

The alleged corruption is one of at least four scandals being probed by the authorities. Last month, the Office of the Director of Public Prosecutions ordered charges against dozens of civil servants suspected of being involved in graft at the National Youth Service, where as much as 10 billion shillings may have gone missing.

Irregular Contracts

The authorities are also investigating alleged theft at state-owned Kenya Power Plc, in which billions of shillings went missing through irregular contracts, according to the Daily Nation, and the disappearance of 1.9 billion shillings from the state-run National Cereals & Produce Board.

The three employees at Kenya Pipeline were sent on one month’s leave after their houses were raided by anti-graft investigators probing a 655 million-shilling tender for hydrant pit valves supplied in June 2015.

The company manages fuel distribution from the port city of Mombasa to the rest of the country and neighbors including Uganda, Rwanda, Burundi and the Democratic Republic of Congo. It’s announced projects including the expansion of oil-storage and liquid-petroleum gas facilities, and is expected to complete a new oil pipeline linking Mombasa to Nairobi later this year.

Sang said that Zakhem International Construction Ltd., the Lebanese contractor building the conduit, has lodged four extension-of-time claims for a total amount of $189.29 million, which were reduced to $44 million after auditing by a third party. Kenya Pipeline has yet to pay the claims and the matter has since been referred to the Petroleum Ministry for guidance, he said.

No one was available to comment when Bloomberg called Zakhem’s Beirut offices outside normal business hours.

To contact the reporter on this story: David Herbling in Nairobi at dherbling@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net, John Viljoen

©2018 Bloomberg L.P.