FRC unearths suspected multibillion garbage disposal tender fraud at City Hall

By , K24 Digital
On Mon, 14 Dec, 2020 13:21 | 4 mins read
garbage disposal
The Financial Reporting Centre (Kenya’s Financial Intelligence Unit) is an independent body whose principal objective is to assist in the identification of the proceeds of crime and combating money laundering. PHOTO | COURTESY

The Financial Reporting Centre (FRC) has unearthed a multibillion procurement fraud at the Nairobi County government involving several companies and at least eight county staff.

The suspect at the centre of the suspected fraud has been identified as Yunis Ibrahim Khalif in a scheme that involved tenders on garbage collection where street children are listed as the beneficiaries.

Other contracts, according to the FRC, involve the supply of Covid-19 kits and road construction tenders.

“The large cash declaration forms completed during cash withdrawals indicated the beneficiary of funds to be street boys employed to collect garbage,” a report by the FRC stated.

The suspects are being investigated on allegations of abuse of office, embezzlement, and violation of procurement laws in what is suspected to have been aided by a high-ranking member of the Nairobi County Assembly serving his third term from Northern Kenya, according to the documents seen by Mediamax Digital.

One of the companies, Flexilease Limited, which received Sh1.1 billion from City Hall is linked to Khalif, according to the documents.

Other beneficiaries have been identified as Capital Waste Management that received Sh58 million, Sifa Cleaning and Bins Services Limited Sh51 million, and Buko Developers Limited which was paid Sh4 million.

The FRC also said Yassil Developers Limited was paid Sh4 million, Asmara Ventures Limited Sh13.5 million, Saffa Construction Sh10 million, and Msafiri Feeds Limited Sh8 million.

According to the report, Yahya Ibrahim Khalif, Yunis, Hassan Ibrahim Khalif and Yusuf Maina are listed as directors of the companies. 

“It is likely eight entities belonging to Yunis Ibrahim Khalif and eight associates engaged in a violation of procurement laws at Nairobi County between April 2017 and October 2020. The entities received payments totaling to Sh1.3 billion from the Nairobi County government for garbage collection and supply of Covid-19 personal protection kits which was not in line with their business profile. There is no evidence the entities paid taxes for the payments received,” the investigation report reads.

According to the FRC, Khalif and his business associates are suspected of using 10 entities related to them to receive millions of shillings from the Nairobi County government and the Nairobi City County Alcoholics Drinks Control and Licensing Fund (NCCADCLF) for garbage collection services and supply of Covid-10 personal protection kits.

An investigation by the Ethics and Anti-Corruption Commission (EACC) revealed that between April 2017 and October 2020, accounts related to Khalif and his proxies cumulatively received Sh1.284 billion from City Hall.

Out of the Sh1.284 billion, EACC claimed that Sh1.24 billion directly benefited Khalif, either through payments to his own entity accounts or transfers making him the beneficial owner. 

“Suspicion of procurement fraud is based on the fact that three of the entities linked to Khalif received contracts for garbage collection in Nairobi County while five entities linked to him received road construction tenders as well as contracts to supply Covid-19 kits,” the documents read.

Flexilease incorporated as a company on June 4, 2013, received in excess of Sh982 million between January 2019 and October 2020 in its DTB Account from the Nairobi County government as payments for garbage collection contract for the 2018/2019 financial year. 

The funds were then utilized through internal bank transfers totaling Sh713 million to the accounts of Abass, Yusuf and a joint account for Yunis and Amina Ali Bulhan. Cash withdrawals totaled Sh132.5 million while cheques to Ibrahim Khalif amounted to Sh26.4 million.

On the other hand, the firm’s Coop Bank Account received Sh122 million between February and May 2018, where cash withdrawals totaling Sh119.6 million and transfers totaling Sh6.5 million to Hass Petroleum account at Standard Chartered Bank.

Capital Waste Management incorporated on May 15, 2015, with waste management the declared business, received transfers totaling Sh58.7 million from Nairobi County between March and June 2020.

The fund would then be wired to Yusuf as Sh35.7 million in cash withdrawal, Sh8 million as internal transfer, and cheque payments of Sh20.2 million.

Sifa Cleaning and Bins Services Limited incorporated the same day as Capital Waste Management, with declared business being cleaning services, between April 2017 and July 2018 received transfers totaling to Sh51.3 million from Nairobi County government for garbage collection services.

The report further reveals that Buka Developers, registered in 2012 with interest in real estate, received Sh4 million from NCCADCLF on July 21, 2020, for the supply of 2,942 packets of medium examination latex gloves at Sh1,360 per packet.

The funds were utilized through an internal funds transfer of Sh4 million to related company YH wholesalers limited on July 29, 2020. 

Yassil, on the other hand, received Sh4 million from NCCADCLF on July 21, 2020, for the supply of 267 infrared thermometers at Sh15, 000 each.

From the payment, Sh2.1 million went to YH wholesalers, Sh800,000 to Asmara Ventures and Sh900, 000 to an influential Nairobi MCA from North Eastern.

Asmara Ventures, registered in 2017, received Sh13.5 million from NCCADCLF on July 22, 2020, for the supply of 2,446 packets of three-layered disposable face masks at Sh5, 500 per packet.

Saffa Construction, registered in June 2019, received Sh10 million from NCCADCLF on July 23, 2020, for the supply of 8,000 bottles of alcoholic hand sanitizers at Sh1,250 per 500ml bottle. Sh9 million went to YH wholesalers owned by Yunis.

Msafiri Feeds registered in 2019, with the supply of foodstuff as the declared business, received Sh8 million from NCCADCLF on July 22, 2020, for supplying 320 bags of chlorine at Sh25, 000 per bag. Sh3 million went to YH wholesalers, Sh889, 000 to Yahya and cash withdrawal of Sh2.95 million.

However, the money trail did not end there as the liquor board on July 20, 2020, instructed Cooperative Bank to enhance the internet banking transaction limit from Sh5 million to Sh30 million, an instruction signed by Julius Matekwa, the board accountant.

Interestingly, the following day, Sh69 million would then be transferred to Buko, Yassil, Asmara, Saffa, Msafiri, Touch Down Tours and Kemanan Enterprises with payment to Touch Down registered as for travel package to Dubai from August 17 and 24, 2020 for the board members on a benchmarking tour of rehabilitation centers.

They included Allan Igambi, Finance CEC, Jairus Musumba, board members, Michael Wathigo and Mwaka Mwola.

“The funds were utilized in structured cash withdrawals totaling Sh3.9 million and a transfer of Sh250, 000 narrated as college fees payment. There was no evidence of payment to an airline to facilitate the travel to Dubai. Notably, none of the board members travelled outside the country as indicated in the supporting documents for the payment to Touch Down Tours Limited,” said FRC.