This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide.
As evidenced by multiple recent legal proceedings, Kenya’s procurement regime includes disciplinary proceedings against government procurement staff who breach applicable procurement rules. However, recent court rulings reveal how some senior government officials are abusing this disciplinary regime by using procurement staff as scapegoats for their own procurement infractions.
For example, in its January 2020 decision in Maurice Adongo Anyango v. Kenyatta International Conference Centre, Kenya’s Employment and Labour Relations Court found that a government entity improperly terminated the secretary of its tender committee for procurement irregularities in relation to a World Trade Organization (WTO) conference. The Court found that the procurement infractions were actually committed by the organization’s managing director, who used the tender committee as a rubber stamp, and by the organization’s board, who repeatedly interfered with the procurement process. The Court agreed with the employee’s assertion that the tenders in question “were being done without his knowledge and outside his office” and that the organization’s managing director had actually bypassed the procurement rules in the award of the impugned contracts:
After careful consideration of the evidence on record, it is a fact that the 13 tenders in issue herein were awarded by the Managing Director through irregular manner and without involving the claimant and the tender committee. Five of them were awarded on 13th July 2015, about 3 weeks from the date of the appointment of the claimant to act as Procurement Manager. The other tenders were awarded in September and October 2015 again by the Managing Director without involving the claimant and the tender committee.
RW1 admitted that there was no evidence that any department of the KICC initiated the procurement process which could have been brought to the claimant and the tender committee before the tenders were awarded by the Managing Director.
In addition to finding that the managing director used the tender committee as a retroactive rubber stamp in an attempt to legitimize his improper contracting practices, the Court also found that the organization’s board was well aware of these irregularities and had actively participated in the improper procedures:
The said tenders were brought to the Tender Committee on 13th November 2015 but they were all Rejected by the committee and referred back to the Tender Processing Committee for re-evaluation. In my view the Tender Committee was only being used as a rubber stamp to sanitize the irregular procurement process which had already been done by the Managing Director in July, September and October 2015.
Again from the evidence on record, it is clear that that procurement was done secretly by the Managing Director and without seeking any advice from the claimant. It is also clear from the Auditor General’s Report dated September 2018 that the Board of Directors was also directly involved in the flawed procurement process by participating in the revision of the cost of the design, supply and installation of computerised conference management system tender. The report further accused the Board of the failure to carry out its oversight and fiduciary role as expected given the haphazard a manner in which the projects were initiated, implemented or not implemented at all.
In view of the foregoing therefore, I return that the claimant did not take part in the irregular awarding of the said tenders and he was not aware when they were being awarded. I also return that the Managing Director and the Board of Directs knew about the irregular tenders because they are the ones who participated in awarding the same.
As regards the records of the procurement proceedings, it is my view that the claimant was not involved in the awarding of the irregular tenders and as such no record of procurement proceedings involved were availed to him by the Managing Director and the Board. One wonders how the claimant was expected to keep regular records from irregular procurement exercise. That in my view was impossible.
The Court therefore ruled that the treatment of the employee’s termination was illegal, irregular, and unfair. Due to the passage of time, the Court did not re-instate the employee, however it awarded damages in the amount of three months’ pay in lieu of notice, 12 months’ pay for unfair termination, and 45 days’ pay for unused leave, for a total of Kshs. 1,457,643.75 ($13,500 USD).
Similarly, in its February 2020 decision in Allan Mwangi Muturi v. Kenya Airways Authority, Kenya’s Employment and Labour Relations Court ruled that the Airways Authority improperly terminated a procurement manager for failing to follow senior management orders to sole-source a construction contract. The dispute involved a contract for the repair of an airport terminal for fire-related damage. The manager claimed that he never received the required World Bank direct award approvals and ran a competitive procurement process instead, which resulted in a contract that was half the cost of the direct award option.
As the Court summarized, the procurement manager was disciplined for not following the direct award orders and received an interdiction letter “directing him to cease discharging any responsibility with immediate effect” since “he had defied the directives from the Cabinet Secretary, Permanent Secretary and the Board of Directors” by failing to rely on the sole-source emergency exceptions to directly award the contract. That letter accused the manager of “gross insubordination to the Board”, of “failure to implement directives of the Board”, of failure to discharge his duties as the procurement manager by “offering practical solutions to a crisis”, and of “demonstrating incompetence and lack of commitment to resolving the crisis.” The Board of Directors failed to provide the employee with an opportunity to respond to those allegations before his termination and he brought a legal challenge alleging that the “the termination was malicious, a witch-hunt and illegal” and that he “conducted the procurement process as per law and had no power to unilaterally decide to use Direct Procurement method.”
The Court ruled in favour of the procurement manager, finding “no proof that the Claimant acted as accused” and finding that he was denied due process since he was never provided with a fair opportunity to respond to the allegations. The Court ruled that the employee was “entitled to maximum compensation for the mistreatment meted out against him” and awarded the former procurement manager 12 months’ salary for unfair and unlawful termination, three months’ salary as notice pay, one months’ salary for each year of employment prior to termination, and pension benefits, for a total of $13, 714, 525 Kenya shillings (approximately $125,000 USD).
Finally, in its May 2020 decision in John G. Thumbi v. Kenya Airports Authority, Kenya’s Employment and Labour Relations Court found that a Airport Authority improperly terminated the chair of its tenders committee over alleged irregularities in the award of a concession contract for airport passenger transfer services. The former chair asserted that the tender award “was not contested by any bidder before the Public Procurement Administrative Review Board or before any court of law and no irregularity was raised at all”. He also asserted that his role as chair did not include inviting bids, evaluating tenders, or signing the contract. However, the president of the Airport Authority issued a press release in May 2015 naming the employee as one of three individuals who were interdicted as part of an investigation into the award, stating that the “persons responsible for the said tender should be held to account.”
The Airport Authority’s letter of interdiction directed the chair to defend himself against allegations of failing to warn the board of problems with the tendering process and of the allegedly unfavourable financial terms in the contract:
The claimant was subsequently interdicted on 19th May, 2015 pending investigations. In the letter of interdiction the claimant was further asked to show cause why disciplinary action should not be taken against him for allowing a procurement process to go on with clear knowledge there were no adequate funds as recommended by the first negotiation committee, accepting to be included as a member of a negotiation committee on a matter which was yet to be concluded by the tender committee where he was the Chair, failure to advise the negotiation team on financial aspects during the negotiations held on 12th August, 2013 to counter the projected cost analysis as provided by Ms Relief & Mission Logistics Ltd, failing to advice the team and management on the negative financial impact the authority was to be exposed to as a result of the contract being skewed to the disadvantage of the authority.
The former chair claimed that the internal investigation was a show trial, where he was not allowed to have another employee of his choice present at a meeting that was “for all intents and purposes a mockery and intended to show semblance of a fair hearing” to legitimize a pre-determined termination decision. The former chair further claimed that he was also exonerated by a related investigation by Kenya’s Ethics and Anti-Corruption Commission, which found no irregularities in the tendering process.
With respect to the financial details of the deal, the former chair noted that the contract in question was a concessions contract for which payment would be made by the airlines, not by the Airport Authority. He also noted that the board had never asked him for his views regarding the financial implications of the deal, and had made its termination decision without waiting for the results of the Ethics and Anti-Corruption Commission’s investigation, which had found no irregularities:
The claimant further stated regarding accusation over allowing the tender to go on without an advisory over the financial implication of the tender, that the tender was a concessionaire agreement and the respondent was not to incur any expense. Second the Board before awarding the tender and having the contract signed never wrote to him asking for his opinion on the financial implications of the tender. The claimant further stated that the tender went on well until the presidential directive that those behind the tender be called to account. The claimant further stated that the tender was subject of investigations by EACC who later returned that there was nothing irregular with the procurement process and the tender. The claimant had however been terminated by the time the EACC gave the outcome of its investigations. It was for these reasons that the claimant felt there was no valid reason for the termination of his contract.
The Court noted that the Airport Authority presented a weak case in defence of its termination decision, which appeared to be a scapegoating exercise directed by the organization’s president:
The respondent on the other hand justified the termination on the grounds that the claimant failed to give an advisory on the financial implications of the tender and that the tender exposed the respondent to risk of loss. The respondent further stopped short of stating that the termination was as a result of the presidential directive that those behind the tender be held to account. The evidence presented by the respondent in support of these justifications was rather cloudy and ill-grounded. In fact the respondent’s witness Mr Mos admitted in court that there was nothing wrong with the tender until the presidential directive.
Further, whereas the respondent alleged that the tender exposed it to financial risk no evidence was produced to support this claim besides the evidence by the respondent’s witness Mr Mos contradicted this allegation when he admitted in cross-examination that the contract was a concessionaire agreement where the contractor would collect their charges from airlines that used the apron buses and that the contract had no financial implications on the respondent.
As observed above, in a claim for unfair termination of employment, once the claimant has established prima facie case that there existed no valid or justifiable reason for termination, the respondent/employer has the duty to justify the termination. In this particular case the claimant has satisfied the court prima facie that the respondent had no valid or justifiable reason to terminate his service. Any reason if at all proferred by the respondent was the presidential directive over the tender that those responsible be held to account. The directive coming from an office as powerful perhaps operated in the minds of the respondent’s Board that holding to account meant someone or some people had to be sacrificed through termination of their contracts of service. This cannot be a justifiable or valid reason as contemplated by section 43 (1) of the Employment Act.
The Court ultimately concluded that the “termination of the claimant’s contract was absolutely unnecessary and selective since it was the respondents Board that finally awarded the tender only to turn around and terminate the claimant’s contract of service for no valid or justifiable cause save for an amorphous directive which was not supported by any forensic or tangible evidence.” The Court awarded the former employee the maximum allowable compensation for the improper termination in the amount of 12 months’ salary for a total of Kshs 11,142,024 (approximately $100,000 USD).
While procurement staff were vindicated in each of these cases, winning their legal challenges against their improper terminations, the financial awards proved to be relatively minor compensation for being improperly terminated based on false accusations of improper procurement practices. This abuse of disciplinary procedures raises serious questions about systemic weaknesses in protecting procurement staff against retaliation when they refuse to break procurement rules and from being scapegoated for the procurement improprieties perpetrated by senior government officials. Institutions should consider establishing proper institutional safeguards for protecting procurement staff from senior officials who want to break procurement rules and then blame others for their actions.
