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Court of Appeal Declares Standard Gauge Railway Contract Illegal

By Whispers Reporter

The Court of Appeal has declared the entire Standard Gauge Railway (SGR) contract illegal following a case filed by activist Okiya Omtatah.

In a ruling delivered by a three-bench jury, Justices Martha Koome (presiding), Gatembu Kairu and Jamila Mohammed ruled that  the government flouted procurement rules.

During the appeal, it emerged that Kenya Railways Corporation (KRC), which was the implementer of the project on behalf of the government, head-hunted CBRC as a contractor before Kenya and China’s Exim bank sealed a financing deal. This, the judges ruled, went against the procurement law and the Constitution.

“We set aside that part of the judgment of the High Court holding that the procurement of the SGR was exempt from the provisions of the Public Procurement and Disposal Act, 2005 by reason of Section 6(1) thereof. We substitute therefore an order declaring that Kenya Railways Corporation, as the procuring entity, failed to comply with, and violated provisions of Article 227 (1) of the Constitution and Sections 6 (1) and 29, of the Public Procurement and Disposal Act, 2005 in the procurement of the SGR project,” the Judges ruled.

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Activist Okiya Omtatah | Photo Courtesy

Omtatah file the case with the Court of Appeal after losing the battle in the High Court, where he sought to have the project declared illegal.

With the blessings of the Law Society of Kenya, Omtatah argued that at least $110 million (Kshs 11 billion) was lost due to duplication of services.

He also argued that the Parliament was not involved in approval as well zero public participation in the project.

SGR1In Court submissions, Omtatah argued that the procurement did not comply with the requirements of the Constitution; that the project was not provided for in the national revenue and expenditure estimates of  the relevant year as required under Article 220(1) of the Constitution which should have been subjected to public participation as required under Article 221(5) of the Constitution.

He also submitted that the provision for the project in the Finance Act, 2013 could not cure the violations of the Constitution committed in 2012; that there was no evidence that the process through which the project was procured was fair, equitable, transparent, competitive and cost efficient as required by Article 227(1) of the Constitution and the Act; and that the process of procurement was shrouded in secrecy, a violation of Article 35 of the Constitution on access to information.

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Opposing the appeals Mr. Ngumbi for the Attorney General and the Public Procurement Oversight Authority (PPOA) submitted that the appeals have been overtaken by events; that as the project has long been completed and commissioned the appeal is moot and an academic exercise; and that what is done cannot be undone.

The judges however found that claims by the appellants that Parliament was by-passed and that environmental considerations were not considered have no merit.

Rulings 1

“It was demonstrated that the project was deliberated upon by the National Assembly following which the Customs and Excise Act was amended through the Finance Act, 2013 by making provision for Railway Development Levy to fund the construction of the SGR. Equally it was also demonstrated that an environment impact assessment was undertaken and a licence granted in that
regard,” added the judges.

Rulings 2

Justices Martha Koome, Gatembu Kairu and Jamila Mohamed said it was not accurate, as was claimed KR that the engagement of China Road and Bridge Corporation as the contractor was as a result of dictation by the financing agreement.

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The activists in their case which was supported by the Law Society of Kenya (LSK) had argued that Kenyans will not get value for money and that the project’s cost was inflated.

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