The dark business of Election 2017

BY KEN OPALA

Elections, just like wars, are huge business. Unscrupulous individuals seize the confusion, disruptions and desperation during political determinations to make quick money. Sleaze circumvents order and corruption fuels electoral theft. Bureaucrats mandated with delivering credible elections get compromised in exchange for monetary rewards in form of tender manipulations.

The scent for quick riches gives electoral management bureaucrats impetus to steal elections. Election 2017 exposed this shadowy intersection of politics, finance and electoral dishonesty.

The Incumbent President Uhuru Kenyatta, was desperate to be re-elected, Opposition leader Raila Odinga was surging in fame, and pollsters were predicting a race too close to call. The Fifth Column within the IEBC seized this moment to make a kill. It wasn’t just about manipulation of procurement to benefit specific suppliers; financial indiscipline included duplicating contracts.

An irreparable feud opened up, pitting Chairperson Wafula Chebukati and the head of Secretariat Ezra Chiloba. IEBC turned into a cash-cow. Fraud became rule of thumb – making Election 2017 extraordinarily lavish. In the end, the election wasn’t just horribly handled. It was blatantly stolen.

At Sh2,540 per registered voter, the cost was 300 percent higher than in 2013. The global benchmark is Sh500 a voter. Ghanaians paid the equivalent of Sh70 per voter in 2016. Tanzania, with 23.3M voters, spent KSh516 per voter, Uganda KSh400 (in 2016), and Rwanda last year KSh171. Only Papua Guinea’s vote is more expensive, at equivalent of Sh6,300.

Now, IEBC is saddled with a Sh3.9 billion debt, having lost Sh9 billion in questionable tendering. It has a total of Sh2.6 billion in pending arrears for goods and services. “The reason elections are expensive here is because of the gymnastics in the acquisition of goods and services,” notes Dr Othieno Nyanjom, an international consultant on development matters.

“Impunity fuels costs. Definitely, Kenya is ridiculously expensive.”
Multiple interviews and audit reports unravel a commission allergic to procurement ethics and laws. It deliberately fails to publicise requisite information for fairness, competition, equitability, and cost-effectiveness, and transparency among bidders.

“Contracts were calculated to easily attract litigations, and, again, to justify delays in favour of preferred vendors,” says an IEBC manager.

According to reports, Sh12.2B Billion worth of contracts were not supported by the obligatory performance security bond. Direct procurement of goods and services worth Sh9.23B – awarded between January 2016 and October 2017 – benefitted favoured suppliers.

To circumvent its own processes, IEBC “caused an intentional delay through discriminatory issuance of bid documents and ambiguity of the award criteria resulting in the award of contracts being challenged and nullified by the Procurement Administrative Review Board or courts”, says the Auditor General.

The Commission then rushed to blame the Exchequer for delays in procurement yet, according to the Auditor General, Treasury released funds between July 2016 and June 2017, “…therefore, there is no justification for use of direct procurement due to inefficiency of funds.”

Most abused
The acquisition of technology and the supply of ballot papers were the keystone contracts, comprising about 30 percent of the cost of the 2017 election. Naturally, they were the most abused.

French company Safran Identity and Security (SIS) delivered the KIEMS technology while Al Ghurair of Dubai supplied ballot papers. These vendors aren’t spectacular. But Kenya’s electoral agency bent all rules in the procurement formbook to allow them influence the 2017 elections.

According to a key source within IEBC, “the engagement of Al Ghurair in the printing of ballot papers was wrought with litigation and the commission position was manifest all through in the defence of this company. They didn’t provide room for alternatives.

The same was with SIS. Anybody would question why IEBC was bent on awarding the contracts to the two.”

Safran identity
Instructively, as early as November 2016, the Secretariat had already settled on Safran and Al Ghurair as suppliers for the bedrock contracts. By the time they were eventually contracted, somewhere between March 2017 and May 2017, the Commission had fiercely fought off all effort to deny the two vendors. It was fixated on the two. And the tactics IEBC used were plainly underhand.

Popularly labelled SIS at IEBC, this French company has changed its title at least three times in the period it has done business with Kenya. It was known as Morpho of France during 2013 elections and then changed to OT Morpho. During last year’s elections, it was Safran Identity and Security, and has since changed to Indemia Identity and Security France.

Why it keeps rebranding isn’t apparent to Kenyans. But hardly in question is that there exists an uncanny IEBC—Safran liaison. In 2013 and 2017 elections, the Commission unwaveringly ensured the French company acquired the requisite electoral technology – related infrastructure despite the obvious reservation by the Opposition.

Even a Plenary resolution in February to lease EVIDs from an African country (such as Nigeria, Ghana, and Ivory Coast) – as this outweighed upgrading the existing systems or procuring new ones in terms of time and cost – wasn’t implemented. The commissioners had asked the Secretariat to “conduct a comparative costs analysis for the three options (upgrading, conversion, and/or leasing)”.

An internal audit found “no evidence of a report in the subsequent plenary meetings” on the compliance. As usual, the Secretariat claimed it was time-strapped. Hardly. It had plenty time to lease the devices. If anything, Safran was awarded the KIEMS contract on March 31, 2017.

It was the same story when, on March 15, 2017, Plenary directed the Secretariat to “embark on the leasing option with immediate effect”. It was to hire KIEMS “from a provider with capacity to deliver within the prescribed timelines” for voter verification and General Elections.

KIEMS replaced the Sh513.5 Million Biometric System Vendor Support and Maintenance contract IEBC had awarded Safran in January 2016. The switch followed a resolution by the inter-parties parliamentary group to have an integrated system. Again, the secretariat failed to effect this decision. Safran got the contract.

IEBC argued the intention to purchase was to build the Commission’s capacity.

At a casual glance, this makes sense. Ideally, the acquisition of new equipment is economical in the long run. “It helps to build capacity,” notes Dr Nyanjom, whose field of expertise includes procurement. “Purchasing helps develop in-house capacity in the longer term”. However, in Kenya’s case, once a device is used, it is left to become archaic or malfunctions altogether.

For the corrupt, declaring devices obsolete or dysfunctional so as to acquire new ones is huge business. The scent for new acquisition is always alluring to unscrupulous bureaucrats.

According to the Report of the Joint Parliamentary Committee on Matters relating to the IEBC, only 8,000 of 15,000 BVR kits available since the 2013 elections were serviceable as at August 2016. Of the 34,600 EVIDs, only 22,500 were usable – and even in this case, their functionality wasn’t certain owing to a high failure rate. Of 40,000 mobile phones, only 15,000 were available then.

Implicitly, IEBC is negligent with its own assets. Kenya’s election is the most expensive in the world, ideally the devices are cheaper elsewhere, and thus economical to lease. Unfortunately, IEBC was fixated on Safran and “economic sense” wasn’t first choice consideration.

Indeed, the cost-benefit analysis was left to the backburner. “It’s a game of musical chairs (intended) to reward loyalty,” Dr Nyanjom says. Equipment is forced to be redundant owing to an entrenched culture of mismanagement, he notes.

Again, in unbridled pursuit of the French firm, the Secretariat stonewalled to a Plenary resolution for a background check on it (SIS), M/S Smartmatic and M/S Gemalto ahead of awarding the KIEMS contract. The proposed due diligence was to inform decision on whom to prefer among the three.

According to the internal audit, this resolution was “not done comprehensively” although Chiloba recently claimed that due diligence was undertaken, only that Chebukati, Ms Nkatha, Roselyne Akombe, and Ms Mwachanya voted against Gemalto. The rest – Kurgat, Guliye and Molu – favoured Smartmatic, he told the Public Accounts Committee.

Smartmatic, the world’s leading provider of voting technology, had no chance at all at the Commission. Its core mission, “to stop voter fraud” was apparently at variance with the selfish position of the influential Fifth Column in IEBC. Last year, the company unmasked an attempt by the Venezuelan authorities to steal election.

In this case, Smartmartic, charged with providing elections technology, blew the whistle over the fraud when the government attempted to steal – it detected a difference of a million votes. It went public.

Gemalto accused IEBC of playing cards under the table, as it were. In a complaint it lodged with Kenya’s procurement regulatory agency against the award to Safran, the company claimed that the Commission was selective in the kind of information it provided bidders.

Incidentally, Chebukati once conceded that Gemalto was “the only technically qualified bidder for KIEMS” yet his Commission couldn’t look at it favourably. Smartmatic and Gemalto had remote chance of succeeding in a situation where things had already been pre-arranged.

RTS Funding
But more telling was the Secretariat’s response to a resolution to engage USAID’s International Foundation for Electoral System (IFES) on the acquisition of the requisite Result Transmission System (RTS). IFES, which procured the 2013 election’s servers, had this time round earmarked Sh2 billion through its Kenya Electoral Assistance Programme (KEAP).

The Secretariat, as in the other cases, reportedly disregarded this decision. Yet this lack of enthusiasm can be explained. On Jamhuri Day 2016, President Uhuru had, without divulging details, spoken out against what he termed foreign countries’ attempt to influence Kenya’s elections through suspicious funding. Exactly a week later, the NGO Coordination Board then headed by Fazul Mohamed declared IFES illegal in Kenya.

Fazul asked the Central Bank to freeze its account.
Instructively, the IFES funding was to be a grant. Instead, IEBC awarded Safran the Sh4.19 billion KIEMS contract against a budgeted Sh3.8 billion. The Auditor General would later indicate an overpayment contrary to the law.

Intriguingly, IEBC further paid Safran for the same goods and services during the FPE. The comparative costs for the August 8, 2017 election and the subsequent poll indicate huge over-pricing for the latter despite it being just one election against the six during the General Election.

The difference was a mere Sh1.672 billion yet the August Election involved acquisition of 45,000 KIEMS and their configuration, training and logistics while (FPE) entailed the purchase of just 15,000 KIEMS kits. But more disturbing, the cost of FPE election-day support of Sh443.8 million “was almost twice that of the General Election” – that’s Sh242.5 million, according to the audit.

In defence, IEBC argued that there was an increase in Safran technical personnel, from 94 during the General Election to 292 in the FPE, a position the Auditor General found wanting. In fact, there lacked proof that all the technical staff were deployed during the FPE and “in any case, elections did not take place in 21 constituencies”.

“In our opinion, the acquisition of goods and services from M/S Safran Identity & Security was done at unjustifiably high price, and therefore, in the circumstances, we are unable to confirm whether value for money was realized.”

Despite the inflated cost, the glitches in General Election also littered the FPE. In fact the October 26 Election was a replica – if not worse than – the August 8 General Election.

Security Bond
Safran couldn’t be held liable for non-compliance, for the contract of September 28, 2017 was without guarantee of compensation in case of non-execution. This is because Safran flatly declined to provide performance security bond for the huge undertaking. It argued that such a bond and a Letter of Credit (which it had) “serve the same purpose”.

It even accused IEBC of creating “another form of security … over the other”.

“The Commission should take comfort in the fact that the services have been substantially performed by the supplier and hence the lack of security for performance for the already performed services has been rendered nugatory … the circumstances obtaining as at today are such that the insistence on performance security are utterly unmerited,” Safran’s Chief Executive Officer argued.

Later it emerged that Chiloba had discussed with Safran the issue of performance security and agreed with the company’s position. He reasoned that at the time the contract was signed, Safran “had performed more than 60 percent of the contract” in what he termed as “high risk” venture.

Against this background, it would appear Safran was the master here; IEBC merely complied.

“Retaining one company over a long time puts the organisation at the risk of compromise. There’s always the desperation to get the contract,” says Dr Nyanjom, currently involved in research linking procurement to misconduct of elections. “The possibility of insider-dealing cannot be ruled out.”

Al Ghurair
And it wasn’t just Safran that enjoyed inexplicable privilege. IEBC – against myriad court cases and petitions to the procurement regulatory authority – went flat out to ensure Al Ghurair Printing and Publishing LLC, a Dubai-based company the Opposition linked to the Jubilee candidate, printed and delivered ballot papers.

“Engagement of Al Ghurair was wrought with litigation and the commission position was manifest all through in the defence of the company. In fact, IEBC didn’t provide room for alternative. It was fixated on this company,” says an insider.

A South African company interested in the contract had its offer in dead water. Ren-Form CC proposed to print and deliver presidential ballot papers in less than a fortnight, if contracted. ”For delivery to (Jomo Kenyatta International Airport) by not later than August 2 2017 provided production starts by July 21,” Jean-Pierre du Sart, its sales director wrote back to IEBC on July 14, 2017.

(The presidential papers for the General Election arrived on August 1, 2017. Implicitly, IEBC wasn’t time strapped as it claimed to justify the contract award to Al Ghurair)

The offer followed a Plenary resolution that an alternative international company be identified to procure the ballots in line with a court judgment that almost disrupted IEBC’s plan to award Al Ghurair. The Court annulled the contract on the basis that IEBC failed to conduct the statutory public participation.

Instructively, Ren Form CC isn’t a run-of-the-mill company; it has supplied ballots in 22 African countries, including Zambia, on three occasions before losing out to Al Ghurair in the August 2016 elections. The Zambian situation has an eerie semblance with Kenya’s.
The same Al Ghurair survived a series of actions, including the cancellation of tender, to force out Ren Form CC. “The combined Opposition and civil society objected strongly to the decision by the Electoral Commission of Zambia to award the tender for printing ballots papers to Al Ghurair Printing and Publishing Company, accusing it of being in cahoots with (President) Lungu’s government,” the reputable Mail &Guardian newspaper reported in August 2016. Ren Form CC’s price in 2016 was less than half that quoted by Al Ghurair – equivalent of Sh170 million against Sh360 million.

Thus, it was plainly fallacious for the IEBC to claim that it was time-strapped and that alternative suppliers lacked the technical capability. In fact, IEBC reached out to Ren Form CC as a matter of procedure.

Notably, Al Ghurair printed an extra 1.2 million (instead of the 196,115 agreed at the Plenary) presidential ballots in controversial circumstances, a matter that further complicated the already strained relations between Chebukati and Chiloba.

On August 1, 2017 – just a week to election – Chebukati asked Chiloba to explain “who gave (him) authority to print excess of 1.2 million instead of 196,115 ballot papers” – the 1 percent was to cater for spoilt ballots and “adverse circumstances “as well as reduce the risk of mismanagement of ballot papers.”

In his response, Chiloba agreed that Plenary had resolved that indeed 1 percent extra ballots were to be printed but the number was to be “rounded off to the nearest 50”. How IEBC resolved this isn’t known, for the matter appeared to have ended with Chiloba’s response.

However, according to the Auditor General “verification undertaken in 35 sampled counties across the country reveals that there were falsification of records on issued ballot papers maintained at IEBC warehouse in Nairobi compared with actual receipts in the field resulting in a variance of 2,534,904 ballot papers which have not been accounted for”.

Data bundles
The Al Ghurair contract was signed just days after IEBC’s then head of procurement Lawy Aura was sent packing “with immediate effect” for declining to give a favourable opinion on the proposed award to Ghurair, according to sources. He was returned to Treasury. At the end, the tender for printing of ballot papers went through open tender, restricted tender then direct procurement. Al Ghurair survived this bizarre process.

Apart from the controversy-strewn contracts for KIEMS and ballot papers, almost all other financial deals had a tint of fraud. The acquisition of data bundles can only pass for binge spending.

IEBC acquired Sh127.6 million worth of data bundles (149,640GB or 149TB) from Safaricom, Telkom and Airtel. Yet when the Auditor General analysed internet use on the SIM cards, only 605.3GB of bundles worth Sh515,269 had been utilized – a mere 0.4 percent of the acquisition.

It’s incomprehensible that IEBC didn’t enter into a post-paid arrangement with the telcos. Either elements in the secretariat were out to make a fast kill or an extravagant IEBC failed to pre-quantify the amount of data required before issuing the contract. Consequently, Sh127.08 million went to waste or was misappropriated.

But more confounding is a case where IEBC cloned contracts – a situation that resulted in the loss of billions of shillings. The works were replicated, given different titles and then awarded separately yet the goods and services involved could have been performed by a single supplier.

Cloned contracts
Perhaps IEBC would argue that it sought to spread risks. But in real sense, the Commission did this to benefit multiple vendors, some with close ties with government honchos.

Duplication was also to create confusion and thus abet electoral fraud. “A single supplier will take care of failures. There won’t be any fighting and confusion. The norm is to give it to one company,” said an IT vendor for key national ministries. “Dealing with different vendors causes confusion, blame games and fighting. That’s how failure comes in.”

IBM was to provide IBM server infrastructure and KIEMS security monitoring solution. Africa Neurotech was to supply and implement IEBC primary and secondary data centre, Oracle Kenya was to provide the Oracle database and security solution while Telkom Kenya was to offer co-location services for data centre and disaster recovery site.

The IBM infrastructure contract awarded on July 17, 2017 and scheduled to run through to June 2018, was procured for Sh425 million, yet the Evaluation Committee had recommended Sh75 million. It involved supply and delivery of vulnerability and event management services, cyber security operations centre, web application and next general firewalls, anti-distributed denial of service solution, email security and licences, network discovery and compliance solution, and one-year hardware warranty and technical support.

Instructively, IBM EA Kenya is headed by Nicholas Nesbitt, a close ally of Kenyatta, and a director of the Kenyatta family-owned Commercial Bank of Africa.

The contract for the provision of Oracle Database & Security Solution, which also comprised the review and assessment of the election technology, was awarded to Oracle Technology Systems (Kenya) Ltd via direct procurement. It was controversial.

First, Oracle itself reportedly drew the terms of reference (ToRs). Second, there was no contract between the Commission and this vendor. Instead, there were signed ordering documents. Third, the KPMG audit of the voter register had already identified inherent security lapses in the IEBC technology and had suggested solutions.

Fourth, the Commission’s ICT department had requisitioned purchase of Oracle database solutions and licences at Sh80 million but it was awarded for Sh273 million.

Yet, despite the inflated cost, Oracle only partially delivered – it conducted one training instead of six. Database Vault, Real Application Cluster (that enables sharing of resources in form of cloud architecture) and training were “not complete”, according to audits.

IEBC contracted Africa Neurotech Systems Ltd to supply, install, implement, and commission and support its primary and secondary data centre equipment. It was paid Sh249.3 million against contract budget of Sh130 million. However, IEBC “paid the vendor before testing and commissioning the equipment”, according to the Auditor General.

The data centre was not ready at the time of the August Election.
Neurotech Systems Ltd is owned by Dan Kinyua Njuguna. A multi-million shillings company with presence in five African countries, is intriguingly classified by the Public Procurement Oversight Authority (PPOA) among “disadvantaged” SME companies – those earmarked for Affirmative Action.

Despite non-compliance, IEBC still engaged Neurotech – through direct procurement – to supply and deliver storage expansion for the converged infrastructure, at a cost of Sh165.7 million. This figure was paid against a user requisition of Sh124 Million. The equipment was delivered on January, 9, 2018 – well after the FPE.
In the end, IEBC paid Neurotech Sh415 million for facilities never used during the two elections.

As regards Telkom, it wasn’t among those pre-qualified for the tender (co-location services for data centre and disaster recovery site). However, in unclear terms, IEBC’s evaluation committee recommended it be awarded the contract, which was inexplicably overvalued by Sh4.92 million.

Cloud server
Once it became apparent that some of these contracts faced problems in regard to total compliance, IEBC and Safran went into a panic mode. The French company wrote to the Commission to be allowed to use Japan’s NTT (Nippon Telegraph and Telephone Corporation) cloud services. The Commissioner would later accept the offer even without a contract between the two, in a letter of July 28, 2017.

Notably, the country walked into election without a back-up server. The Commission didn’t have any data recovery infrastructure. And this explains why IEBC couldn’t respond in time to SCOK’s demand for access to the server.

Nonetheless, IT experts question why IEBC dealt with NTT through Safran Identity yet the Japanese company has local representation – Dimension Data (which operates in Kenya as Dimension Data Kenya, Internet Solutions Kenya and Plessey Kenya.

“The Commission needs to justify contracting process for cloud services while at the same time incurs Sh1,002,813,667.97 on similar services that were never utilized,” says the Auditor General.
Reports indicate that IEBC awarded contract for cloud services despite an advisory by the Communication Authority of Kenya (CAK) against the use of private servers. CAK, in response to IEBC”s proposal to use a private cloud server to supplement its primary and secondary disaster recovery sites, warned that sensitive data couldn’t be placed in private hands.

Intriguingly, the cost for cloud services during FPE was Sh50.7 million more than during the General Elections.

Undelivered goods
On June 20, 2017, the then IT chief Chris Msando presented a paper on the transmission of results for the August elections in which he indicated that some polling stations were out of the 3G and 4G network coverage required for KEMS transmission of results. An analysis found 11,115 stations reportedly outside the network coverage.

To cover up, IEBC proposed 1,000 and 1500 satellite units (at cost of Sh550 million and Sh825 million respectively) to be used in results from outside the requisite network. The first batch of Airtel’s 1,000 Thuraya data modems and SIM cards were distributed to constituencies before the Aug 8 elections.

However, in the end, only 339 modems and SIM cards with 4GB were used. The rest, according to IEBC internal audit, were delivered on August 24, 2017, way after the polls – although the Auditor General says that they were in fact supplied much later, on October 5, 2017.

Yet, despite this, IEBC still went ahead to give out another contract for 1,000 units for FPE and which were received in January 2018. The Commission appeared not interested in the devices it had procured for the August polls or the unused 600. In the end, owing to delay in delivery, IEBC “reactivated and reused” the devices, according to Auditor General.

Thuraiya phones aside, IEBC purchased, through direct procurement SIM cards at very inflated rates. An ordinary card – which in most times telcos dish out freely to attract potential subscribers – was purchased at Sh173 instead of the market retail price of Sh50.

It was the same case with the Sh90.4 million contract for the provision of indelible pens, awarded to Elmak Chemical, a company later mentioned in the controversial importation of the so-called contaminated sugar (about 600 bags of “unwholesome” sugar valued at Sh4 million was recovered in its go-down).

IEBC considered buying the pens at Sh121 per unit (and would have thus incurred Sh10.48 million) but it went ahead to tender at Sh685 a pen. Yet, despite the exorbitant cost, the Secretariat falsified records of the pens in the warehouse in Nairobi and the actual receipt in the field, resulting in 16,912 pens not supplied (valued at about Sh12 million).

That apart, a ballot box that cost Sh1,800 during the August election was later procured at Sh2,500 for the FPE. This was in spite of the similarity in specifications and same supplier. Thus IEBC lost Sh27.9 million (from purchase of 42,927 boxes) in inflated costing.

Mini Mix Agencies was on March 3, 2017 awarded the Sh19.5 million contract to supply and deliver 3,696,000 security seals at unit price of Sh5.30. However, it delivered just 2,001,600 units on July 22, 2017. The rest, 1,694,400 seals, were supplied on October 19, 2017 – more than 2 months after the election. Yet IEBC didn’t terminate the contract even after the supplier had stalled.

Instead, the Commission rushed to contract Ramaas Supplies Ltd, through direct procurement, for 500,000 seals at Sh24.5 million (at Sh49 a unit) to mitigate the shortfall. Instructively, this company had failed at the preliminary evaluation stage during the tender process, having quoted Sh18.10 a unit.

High Court Judge Pauline Nyamweya last October ruled that the Sh350 million contract to provide “strategic communication and integrated media campaign services” was irregular. The Secretariat had deviated from Plenary resolution and inexplicably hired ScanAd.

All said, “Election 2017 was a swindle”, according to a member of the now-defunct Interim Independent Electoral Commission. “The theft was beyond the imaginable. Rigging became a huge industry.” (

This article is drawn from research commissioned by the Africa Centre for Open Governance (AFRICOG)