Ethics & Anti-Corruption Commission v Catherine Nkirote t/a Venyte Suppliers & Joscate Sales and Supplies & 2 Others [2020] eKLR

Case Caption:

In the High Court of Kenya at Nairobi; Anti-Corruption and Economic Crimes Division; Civil Suit No. 6 of 2018; Catherine Nkirote T/A Venyte Suppliers & Oscate Sales and Supplies, John Kago Murima, Jane Makena Maingi T/A Qsetters Investments.

Case URL:

http://kenyalaw.org/caselaw/cases/view/193153/

Summary Significance:

“The procurement law enjoins the procurement entity, evaluation committee and the tender committee to exercise due diligence to ensure value for money in every action they take in procuring goods or services” This burden does not befall the supplier when the procuring entity fails.

Applicable laws:

•Section 31(1)(b) and 73(1) of the Public Procurement and Disposal Act 2005.
•Regulation 8(3)(7) and 10(2)(e) of the Public Procurement and Disposal Regulations 2005.

Brief Facts:

The plaintiff, the EACC filed suit against the defendants who are all relatives seeking various orders against the them. Among the prayers sought were a declaratory order against the defendants that the award of tenders to them was irregular and subsequently the contracts were void ab initio and an order of restitution for Kshs 45,517,241.40 to the National Youth Service being the aggregate payments received by the 3rd Defendant as a result of irregular procurement process or in the alternative an order for restitution to the NYS a sum of Kshs 33,700,000 being the difference between the payments received, and the actual value of material supplied. The plaintiff also filed an application for preservation of monies in various bank accounts and wasting parcels of land belonging to the defendants. The plaintiff alleged that the defendants embezzled government funds through illegal and irregular contracts allegedly awarded to the defendants for the supply of various goods and services to the NYS at inflated prices when compared to the prevailing market prices then. It was contended that the procurement process was tainted with fraudulent practices by the 1st Defendant in contravention of sections 31(1) (b) and 33 (3) of the provisions of the PPDA thus acquiring Ksh 45,517,241.00 from NYS. The Defendants denied the allegations claiming the procurement process was procedurally, competitively and lawfully done.

Issues for Determination:

I.Whether the procurement process in respect of Tender Nos. NYS/93/2014-2015 and NYS/RTI 35/2014-2015 were validly awarded;
II.Whether the cost at which the goods were supplied was illegal or unreasonable;
III.If the answer to (2) above is true, whether this court can declare the contracts void ab initio;
IV.Whether the reliefs sought can be issued;
V.Who should bear the costs of the suit.

Holding:

No party disputed the fact that restricted tendering method was the most suitable method for procuring the goods in question. The court noted that there was no dispute that the goods contracted were duly supplied and payment made to the suppliers. NYS did not complain of non-delivery nor breach of contract. The suppliers did not complain either of breach of any conditions in terms of the contract. Although section 31(1) of the PPDA provided that for a person to qualify to be awarded a tender he must have resources among others, there was nothing wrong in lacking sufficient resources after the award of the contract hence result to borrowing. As long as the goods were supplied by the entity that won the contract, it was none of the procuring entity’s business to follow on the source of the money used to buy goods. It was also not the role of NYS to question how the money was spent and who obtained how much and for what purpose. On whether the cost at which the goods were supplied was illegal or unreasonable and if so whether the court could nullify the contract, the court held that the burden to prove fraud or manipulation of prices quoted or stage managing of the tender process was with the plaintiff which had to prove that the defendant through deceit or dishonest means did actually manipulate the exercise(prices) and unduly benefited from the over exorbitant prices quoted. This burden was higher than the ordinary cases which were pegged on a balance of probability Like any other ordinary contract, the defendants were duty bound to quote the price that best served their profit interest in business. If they quoted a price the procuring entity felt was unreasonable, that entity was under no obligation to accept the offer, proceed to award the contract at the price offered and then pay. The defendants were not under obligation to quote the lowest. The procurement entity voluntarily accepted the price quoted. There was no proof of collusion, coercion, undue influence over the evaluation committee, tender committee or even the P.S. The defendants had no role to play in fixing the price to be awarded and there was nothing irregular in quoting a higher price. The court noted that the people who were culpable or responsible of the exorbitant prices should have been enjoined in the suit as defendants or sued independently if not surcharged. The court further noted that it could not rewrite a contract that had been voluntarily entered between two consenting parties with full capacity to enter into a binding contract. The plaintiff had not proved their case and the same was dismissed

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