Suppliers, Prisons service Sh6.2bn pay dispute drags on

The standoff over the payment of pending bills worth at least Sh6.2 billion owed to suppliers by the Kenya Prisons Service since last year is now headed to crisis level after the Correctional Services Department vowed not to pay the money after all.

STOP PAY

Since July last year, suppliers have been waiting for the end of a verification exercise that was meant to weed out the genuine ones after Kenya Prisons was rocked by a Sh4.8 billion classified tenders supply scandal.

Correctional Services PS Zainab Hussein, who had just been transferred to the department from Irrigation, ordered a stop to payments of all pending bills and cancelled award notifications that had been given to suppliers.

Since then, the affected suppliers have been waiting to be paid but it now seems they will not get a penny until Treasury gives them a clean bill of health.

“Any outstanding claims that were incurred before June 30, 2018 were invalidated by three special audits and therefore the department is not in a position to settle these claims,” says a notice sent to the suppliers by Ms Hussein on December 16.

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DISCREPANCIES

“Therefore, all outstanding claims have been forwarded to the National Treasury Pending Bills Committee and until the committee makes a determination on these outstanding claims, the department cannot make any further action,” says the notice.

At the crux of the matter is suspected collusion between rogue suppliers and employees at the Department of Correctional Facilities and Kenya Prisons who had for years colluded to flout procurement rules.

An audit report on the discrepancies, which has now been forwarded to the Ethics and Anti Corruption Commission (EACC), shows that unscrupulous employees paid suppliers who did not have credit letters, inspection or acceptance certificates.

In some cases, payments were processed without following proper procurement guidelines while some suppliers were paid the full amounts owed to them even before they had supplied. The result of these discrepancies is that genuine suppliers were forced to wait for months to be paid, leading to a huge backlog of pending payments.

PLASTIC HELMETS

EACC is already investigating a tender for the supply of bullet proof vests and plastic helmets that was awarded to Firetruss Systems for Sh2.2 billion. The Commission is also investigating Pakistan Ordinance which was awarded a tender worth Sh595.7 million to supply standard G3 firearms and another Sh478.5 million tender for supply of submachine guns.

Also under investigation is Mildat ZO, which won a tender to supply rifles amounting to Sh343 million and Milways Enterprises which was awarded Sh200 million to supply slings for the rifles.

The Commission in March stopped payments worth Sh3.6 billion (80 per cent) which was to be paid before the delivery of the security items as there was no tender performance security or bank guarantee. The argument was that this would have exposed the government to high risk loss.

With the payments for supply of weapons remaining stopped for nine months and those for other supplies having not been paid for 16 months pending further audit, suppliers say they have been pushed to desperation.

CAT AND MOUSE

Some say they have sold all their properties to stay afloat as banks have auctioned them. There is even talk of going to court to demand for the payments to be released after protests last Tuesday at the Department of Correctional Facilities at Tele Posta Towers yielded no fruit.

“We have written to the PS and tried to meet her without success,” says Kakamega County Suppliers chairman Ibrahim Mohammed.

“Some of us have been forced to play cat and mouse games with banks to avoid auctioneers who are after our property over unpaid loans. Others have even died because of stress waiting for their payments,” he says.

The bills that haven’t been paid yet, which have accrued over the years, are for items such as food, linen and agricultural inputs, as well as construction works.

QUESTIONABLE

A team of 40 auditors had verified the claims and concluded that they were not payable. An audit laid before Parliament said the Prisons Department accrued Sh6.2 billion pending bills and made questionable payments worth Sh1.15 billion in the 2017/18 financial year.