February 20th, 2012
Troubled East African Portland Cement Company is seeking to overhaul its list of suppliers amid a boardroom wrangle that the government has linked to fraudulent procurement.
In a newspaper advertisement, EAPCC is seeking to vet afresh 98 suppliers of goods and services, saying only companies scoring highly as per its evaluation criteria will be pre-qualified.
“All existing suppliers who wish to be retained in the database (of suppliers) must apply and submit up to date information requested in the current pre-qualification data sheet,” read part of the advertisement.
Analysts say the fresh vetting of the company’ suppliers could be driven by a need to clean up its procurement department in light of the accusation of fraud.
“The company could be moving to ensure their long-running relationship with suppliers is not tainted with fraud and that it gets value for money,” said Robert Nyamu, the head of forensic audit at Deloitte Eastern Africa.
Mr Nyamu said the review of pre-qualified suppliers helps companies to shake off old suppliers who may collude with senior management to push through fraudulent contracts.
Among the items and services EAPCC is seeking to pre-qualify suppliers for include raw materials such as coal, bauxite, and clinker whose recent supply contract sparked off the ongoing court battles.
Industrialisation minister Amason Kingi—who sought to suspend EAPCC’s board on December 22—has accused it of spending Sh1 billion on goods without following competitive bidding and, in another instance, overruled the tender committee to vary the terms of a clinker contract. “Those purchases were made by direct procurement or restricted tendering,” read part of an affidavit by Mr Kingi.
The affidavit, for instance, said the board changed the terms of a contract to supply 140,000 tonnes of clinker after the supplier — Sanghi Industrial -— requested to increase the price from $58.90 per tonne after supplying only 67,000 tonnes.
The irregular purchases were made between August 15 and November 30, 2011, according to the affidavit.
The company’s directors, who have been temporarily reinstated by the high court, have hit back at Mr Kingi, saying the minister wants them out over a multi-billion shilling tender that the government allegedly wanted to go to a local supplier. They said the award of the Sh1.8 billion kiln upgrade contract to a South Korean firm, had upset government officials.