DPP to prove Erdemann Property used bribes to secure Sh 4.1B Lake Basin mall tender

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Milimani Law Courts.

The Director of Public Prosecution has told the Nairobi Anti-Corruption court that he intends to prove that Erdemann Property Limited used bribes to secure the Lake Basin Mall tender.

In his opening statement, the DPP through special prosecutor James Kihara told trial magistrate Kagure Nyutu that EPL submitted the tender documents after the tender period had lapsed and bribed officials to secure the award of the contract. 

“There was over payment for the contract with 57% beyond the requisite percentage of 25%,” Kihara said.

The DPP further submitted that they will prove that agents of Lake Basin Development Authority (LBDA)  misled the authority by submitting a final account of about Sh 4.1 billion which was over and above the actual value of works executed in the project.

“We will also prove that the contractor has so far received a payment of Sh 4.5 billion which is way over the contract amount leading to loss of public funds,” Kihara added.

In the case, former LBDA Chairman Onyango Oloo is charged alongside 10 others over the Sh 4.1 billion mall.

Others charged are LBDA Managing Director Peter Abok, Zhang Jing, Zeyun Yang and their company Erdemann Property Ltd, David Oyosi, George Odawa, Innocent Momanyi, Symbion Kenya Ltd, Feradon Associates Ltd among others.

According to the DPP, the defence may argue that the construction of the mall as per LBDA’s specification is complete awaiting handover to LBDA. “However, we will establish that the cost of completing the works was exorbitant hence LBDA failed to get value for money in the project.”

The prosecution intends to prove that the inception of the idea of the construction of a shopping mall in lower Kanyakwar area in Kisumu county was conceptualised, advertised and intended to be purely a public private partnership project under the Public Private Partnership laws where the successful bidder was required to provide financing for the entire project and recoup their investment through proceeds from the investment.

The court heard that the DPP will prove that Erdemann did not meet all the mandatory requirements for the bid.

Kihara said they will prove that the irregular process commenced and the terms were changed by Erdemann Properties purporting that they would provide 80% of the funds and LBDA was to provide 20%. 

“The Prosecution will then establish that Erdemann Properties Ltd never provided any amount for the project, instead they entered into a financial arrangement with Cooperative Bank and borrowed to finance the project and irregularly charged the property of LBDA in disregard of the law,” Kihara told the court.

The DPP also intends to prove that the procurement as concluded under the Public Procurement and Disposal of Assets (PPDA) regime was irregular adding that the requisite Public Private Partnership (PPP) Directorate was not sought and obtained by LBDA prior to commencing the procurement process.

The Chinese Company was engaged in 2013 by LBDA for construction of a mixed retail mall which also included a three-star hotel, showroom among others.