All is not well with the Sh14.5 billion police security communication system that was single-sourced to Safaricom. Government officials have all dissociated themselves from the contract fearing the legacy issues that may follow.
First, the barter trade that was originally touted as the payment method has been quickly abandoned by the National Treasury. Government financial regulations do not permit off balance sheet transactions. As originally crafted, Safaricom had proposed to finance the rollout of the system whose cost was to be repaid by offsetting against the 4-G frequency spectrum fees, which Safaricom would have been due to pay in future. That has now been rejected. All frequency fees due and payable must, by law, be paid into the Consolidated Fund and cannot be used to offset other liabilities.
Second, Safaricom has now proposed to recover its money from the government portion of Safaricom dividends. This would still flout governmental financial regulations as it would amount to an offset. Government dividends must also first go to the Consolidated Fund.
Notwithstanding this quagmire, Huawei officers are camping at the offices of the Inspector-General wanting him to initiate the process of the Sh30 billion balance of the project to the remaining 45 counties. However, no one in government wants to be associated with this either. Huawei have thrown in a sweetener: China Exim Bank financing.
This highlights the frauds being originated and perpetuated through projects which are touted as self-financing. No attempt is made to interrogate the cost of this financing. And why shouldn’t these projects be tendered openly, with bidders being asked to propose technical solutions with financing options? Why is the Police Communication Network not open to, say, Motorola or Siemens, for competitive bidding to determine who has the best solution and who has the best financing option?
The recent UK Anti-Corruption Summit has now blocked this single-sourcing loophole by requiring countries to subject all financing agreements to an objective criteria in which like-for-like comparisons must be made.^