Kenyan public procurement is subject to rampant corruption and bribery. Companies report that bribes and irregular payments are highly common in the process of awarding public contracts (GCR 2015-2016). Tendering fraud is the fastest growing economic crime in Kenya: One in every three companies reports experiencing fraud in procurement during the past two years (PwC 2016). Businesses report that the vendor selection stage is most likely to be subject to fraud (PwC 2016). Allegations exist that high-level corruption takes place in energy, airport construction, and infrastructure procurement processes; a number of contracts were awarded to foreign firms that allegedly did not comply with public procurement laws in Kenya (ICS 2016). Furthermore, the process of devolution has led to an increase of patronage in county-level procurement processes (BTI 2016). A survey among government officials concluded that procurement fraud is prevalent, particularly on the county level (EACC 2016). Companies report diversion of public funds and favoritism in the decisions of public officials to be common (GCR 2016-2017).
On the Public Procurement Oversight Authority (PPOA) website, companies can find information on Kenya’s public procurement regulations, debarment from participation and procurement manuals, and can submit bids. Companies found guilty of violating procurement regulations may be debarred at the discretion of the director general. All major transactions require competitive bidding by law (ICS 2016). Companies are recommended to use a specialized public procurement due diligence tool to mitigate the corruption risks related to public procurement in Kenya.
Kenya Power, the national electricity company, stands accused of procurement fraud over handing a contract to a Chinese firm that had been in existence for only 11 months and thus not meeting the requirement of having audited reports for the last 18 months, raising suspicion about the transaction (Standard Digitial, Dec. 2016). Furthermore, the price of the contract was KES 1.2 billion higher than the bid of the lowest bidder (Standard Digitial, Dec. 2016). In another instance, a major pipeline construction project in Kenya has reportedly cost taxpayers over USD 350 million following allegations that officials colluded to construct a pipeline with a much higher capacity than necessary for the purpose of operating a kickback scheme (Daily Nation, Mar. 2017).
The country’s top politicians are facing corruption charges from Kenya’s Ethics and Anti-Corruption Commission and from Swiss authorities. Former finance ministers, permanent secretaries, and senior government officials have been linked to extensive bribery schemes involving a number of inflated state contracts worth USD 700 million that were awarded to phantom vendors. As a result, a number of necessary infrastructure projects were not delivered (Guardian, Mar. 2015). No one has been sent to jail over the case so far (Tuko, Dec. 2016). The fallout of the scandal is continuing; Swiss prosecutors are trying to recover funds stashed away in Swiss bank accounts (The Star, Apr. 2017).