Africa-Press – Kenya. The State auditor has revealed how a firm linked to ex-Mombasa governor Hassan Joho landed an exclusive deal to operate an inland cargo terminal based on forged letters.
A special audit shows that Autoports Freight Terminal Limited was awarded a tender to operate at the inland cargo terminal in Nairobi in 2018 after authorisation resolutions were falsified.
The reports details how the then-acting Kenya Railways Corporation (KRC) managing director allegedly forged board resolutions, handing the firm the contract on concessionary terms.
Autoports Freight Terminal Limited had sought to be given concessionary lease terms after being allowed to set up at the Nairobi Freight Terminal (NFT).
The firm wanted to pay a discounted freight tariff of $450 per wagon of 60 tons for a period of 10 years and waivers of stand premium and annual rent premium for 10 years.
It also wanted an automatic renewal of its 45-year lease and a termination clause period of 24 months.
The report says that the KRC board had vehemently rejected the waiver appeals by AFTL,arguing they were only available to firms setting up their own greenfield facilities.
Those using existing terminal facilities especially those tax-funded do not qualify for the waivers.The board then resolved that offering comparative rates for the Autoports’ operation at the NFT and the proposed rail logistics hub at Athi River by Grain Bulk Handlers was impossible.
This was because the NFT had already been developed through public funds.
The state auditor, however, says the then acting KRC managing director wrote to the Transport Cabinet Secretary conveying a message that the board had approved the appeals by Autoports.
This was seen as falsifying resolutions of the board that rejected the company’s appeal for waivers.
“There was a letter from the acting MD (Ref: KRC/CS/MD/3/388) dated December 14, 2018, addressed to and received by the CS for Transport on December 17, 2018.
The content of the letter misguided the CS that the board approved all the conditions of Autoport’s appeal and was requesting for the CS’s approval.
The special audit did not obtain any official written correspondence from the CS responding to this request,” says the Auditor-General in the report.“A letter was then sent to Autoports by the acting MD (Ref: KRC/CS/MD/3/338) on the same day communicating a resolution of the board and indicating concurrence by the CS contrary to the actual events.”
However, the Auditor-General said that the special audit could also not independently ascertain the origin of the contractual arrangement between KRC and Autoports.
It would also not find what the firm had expressed as its interest to invest to support the movement of cargo via the standard gauge railway (SGR).
The Attorney-General observed that KRC could not legally lease without utilising the provisions of the PPP Act.
This is because the facility had already been built up using taxpayer funds and required no further investment on the part of the company leasing it.
Autoports wanted exclusive use of the freight terminal strategically located near the SGR terminal in Syokimau.
However, rival logistics companies protested the allocation claiming it would cost the government revenue and cause losses.
The firms had long-term transportation contracts with other logistics firms.
Autoports also secured a preferential deal to transport cargo from Mombasa to Nairobi over a 10-year period at up to 80 per cent discount.
This is against the maximum volume discount of 10 per cent allowed in the corporation’s tariff book.
To be given the special rate, Autoports promised the KRC guaranteed business volumes by moving 1.6 million tons (or 24,615 wagons) annually.
Autoports would ideally pay KRC Sh5.28 billion to transport the 24,615 wagons it promised to move at the preferential rate of Sh45,000, but under the concessionary terms, this would fall to about Sh1.1 billion.
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