The Nigerian government has reportedly included Sh5.2 billion (Naira 10 billion) for the purchase of a naval ship for which Kenya paid Sh4.1 billion in 2003 and which has not been delivered. Nigeria’s 2012 budget proposal has listed the purchase of the naval ship to be approved by Parliament. And sources at Kenya’s Department of Defence said the ship is scheduled to be delivered this year.
According to Pointblanknews.com, a Nigerian internet newsletter, the Nigerian National Assembly is scheduled to approve the the purchase of the navy vessel valued at about $30 million for the Nigerian Navy, although it already has Kenyan military insignia. The Federal Government of Nigeria’s 2012 budget allocations indicated that Naira 6.7 billion has been set aside under code 0116004 for the acquisition of two offshore patrol vessels labelled as “Kenyan OPV” that will be based in Calabar/Lagos. Six patrol boats and six X17m inshore boats are included in the Naira 10 billion Nigerian naval purchases.
Kenya was made to sign the contract for the vessel procurement in 2003 but had to stop payment when Euromarine, the company based in Barcelona, Spain, contracted to do the job reportedly inflated the cost of the project. The vessel was supposed to be delivered to the Kenya Navy in August 2005. Kenya also discovered that Euromarine has a business relationship with Anglo-Leasing Finance, which was indicted by the office of Controller and Auditor General’s Report on the Anglo Finance Scandal.
The Auditor General published a report on the single sourced security contracts where widespread fraud through non-delivery and overpricing were suspected with Anglo-Leasing Finance owned by one Deepak Kamani. Euromarine, a company whose address could not be found in Spain where it claimed to be domiciled, is linked to the Sri Lankan tycoon Anura Pereira who has been investigated and indicted for corruption in Kenya.
A team of Kenyan military and State Law office officials are currently negotiating with the contractor Astilleros Gondan over payment. “The ship is coming to Kenya. We have sorted out all the hurdles that were there. This matter was brought to our attention two weeks ago but only time will tell. We will display it for all journalists to see when it arrives,” stated the DOD source.
Another source within government dismissed the Nigerian report as pure rumours. “This is just porojo (rumours) from Nigeria”, stated the source. Multiple sources stated that Kenya signed a deal with Euromarine three weeks ago to deliver the ship. Two weeks ago, DOD director of communications Bogita Ongeri told the Daily Nation that Kenya was expecting the delivery of the naval ship anytime now. The Daily Nation quoted him saying: “Negotiations are at a very advanced stage to have the ship delivered. Our officers from the Kenya Navy and the State Law office have been negotiating with the suppliers and we will soon have it delivered”.
In the report, Ongeri said the renewed negotiations followed a report by the Parliamentary Committee on Defence and Foreign Relations in September 2006. “The committee gave the contract a clean bill of health so what remains is for our officers to finalise negotiations so that the ship is delivered. We hope to complete that very soon,” Bogita said. Payments on this contract were stopped in June 2005 over the Anglo Leasing Finance scandal. The supplier then sued the Kenya government for withholding payments.
The Nigerian government’s Sh5.2 billion budgetary allocation is part of the 2012 budget proposal for capital projects for the Nigerian Navy which also includes additional Naira 6.7 billion for purchase of two offshore patrol vessels, Naira 1.2 billion for purchase of six Coastal Patrol Vessel for South South and South West and Naira 1 billion for purchase of 6X7 M Inshore Boats and Spares. Although the naval ship was specifically built in 2003 for the Kenyan Navy, it is a subject to litigation at the United Nations Commission on International Trade Law, UNCITRAL.
The vessel, codenamed KNS Jasiri, has been docked at a shipyard in Spain since 2005 rusting away with most of its parts reported to be malfunctioning. In February 2008, Euromarine wrote to the Head of Public Service Francis Muthaura complaining that the Kenya government had stalled payment and threatened to sell the naval ship. Middlemen then brokered a deal with Nigerian ministry of Defence officials to purchase the same ship.
The investigative website Pointblanknews.com reported that since completion of the naval ship in 2005 it has developed technical malfunction with Z-drive lower unit gear, major rust underneath, a rusting exhaust pipe, and parts of the hull do no fulfil military requirements as a research vessel. “Much of the equipment on board is outdated and not functioning any more. It is full of rust and other possible defects as the vessel has not been operating since it was manufactured in 2005,” the website quotes a source in Spain.
Reports indicate that Nigeria will spend more that Sh2 billion ($25 million) on the ship’s repair. The Nigerian Minister for Defence Bello Haliru, Chief of Defence Staff, Air Chief Marshal Oluseyi Pentirin, and Chief of Naval Staff, Vice Admiral OS Ibrahim, are reportedly privy to the plan to purchase the ship. In 2007, Kenya Parliament’s Committee on Defence chaired by then Laikipia West MP GG Kariuki went on a fact finding tour in Spain where the ship was docked and held meetings with the suppliers before preparing its report.
The report, adopted by Parliament in May 2007, was heavily criticised by civil society groups which accused the committee of taking part in a cover-up to swindle the Kenyan taxpayer out of billions of shillings. Independent anti-graft watchdog Mars Group questioned why the Parliament’s committee did not meet with the Attorney General or scrutinise the legal and financial contracts to satisfy itself that procurement rules were followed and that the ship was value for money.