1. The Plaintiff has brought this suit for recovery of Kshs 24,460,000 alleged to have been corruptly acquired from the County Assembly of Kilifi (a public organ) and unlawfully, fraudulently and illegally, paid the 1st Defendant purportedly in respect to procurement of 6000 pieces of long-lasting insecticide- treated mosquito nets during the financial year 2015/2016.
2. The Plaintiff claims the said sum of Kshs 24,460,000 together with interest. It also prays for the costs of this suit
The Parties
3. The Plaintiff is a Body Corporate established under Section 3 of the Ethics & Anti-Corruption Commission Act. It is mandated to Institute and conduct proceedings for the purpose of recovery or protection of public property.
4. The 1st Defendant is an adult of sound mind trading in the name and style of Mediscope Agencies a business name registered under the Registration of Business Names Act. He was also the director of the 3rd defendant.
5. The 2nd Defendant was at all material times an adult of sound mind who resided within the republic of Kenya.
6. The 3rd Defendant was at all times to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
7. The 4th Defendant was at all times of the suit trading in the name and style of Dankies Agencies a business name registered in Kenya under the Registration of Business Names Act and carrying out business in Nairobi within the Republic of Kenya.
8. The 5th – 18th Defendants were at all material times to this suit employees of the County Government of Kilifi.
9. The 19th Defendant was at all times relevant to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
10. The 20th Defendant was at all times relevant to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
11. The 21st Defendant was at all times relevant to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
The Plaintiff’s case
12. The Plaintiff avers that it launched investigations into the allegations that the County Government of Kilifi irregularly paid public funds of Kshs. 26,460,000 to Mediscope Agencies in respect of procurement of 6000 pieces of long lasting insecticide treated nets during the financial year 2015/2016 and established that the Defendants jointly and severally facilitated and willfully participated in a corrupt enterprise with the corrupt aim of fraudulently acquiring public funds from the County government of Kilifi through fraudulent and corrupt means; that the 1st Defendant received Kshs. 8,820,000 from the County Government on three different dates 3rd July 2015, 20th August 2015 and 24th September 2015 in his bank account number 0450262447332 through fraudulent and corrupt practice in respect of procurement of 6000 pieces of long lasting insecticide treated nets; that the 1st, 2nd and 4th Defendants through a joint fraudulent scheme and corrupt enterprise unlawfully acquired public funds of kshs 24,460,000 through bank account 0450262447332 at Equity bank in the name of the 1st Defendant thereby causing substantial damage and adverse pecuniary prejudice to the County Government of Kilifi and that the 1st, 2nd and 4th Defendants through a joint fraudulent scheme and corrupt enterprise unlawfully acquired public funds of kshs 24,460,000 from the County Government of Kilifi thereby unjustly enriching themselves to the financial detriment of the government of Kenya.
13. Further that the 5th, 6th 7th,8th, 9th 10th 11th, 13th ,14th 15th 16th 17th and 18th Defendants as public officers and in their respective course of employment were jointly and severally negligent in respect to the procurement of 6000 pieces of long lasting insecticides treated nets thus leading to illegal and fraudulent loss of public funds in the sum of Kshs. 24,460,000 to the detriment of the County Government of Kilifi.
14. To prove its case, the Plaintiff called the following witnesses: — PW1, Keziah Wangui, testified that she conducted a special audit at the request of Chief Finance Officer, Benjamin Kaai (the 12th Defendant). She investigated several vouchers, particularly one for Kshs. 8,820,000 payment to Mediscope Agencies and discovered three such payments made using the same LPO number. Two payments were cancelled in Integrated Financial Management Information System (IFMIS) but still processed through the Central Bank of Kenya (CBK) Internet Banking System. She stated that only one payment voucher was available and properly documented. The other two lacked supporting documents. Her report also flagged “below-the-line transactions” payments made without corresponding budget votes. She recommended a forensic audit, which was never done. In cross examination she stated that she could not confirm physical delivery of the mosquito nets. Audit relied purely on available documents, and no physical stock verification was done. The delivery note and invoice were dated before the LPO issuance, hence raising doubts and the IFMIS reference number REC/0000619536 corresponded to at least two payments instead of one.
15. PW2, Maureen Kimeli, testified that she was an accountant with experience in the National Government's Finance department and IFMIS Department. She briefly explained how IFMIS is a system used by the National and County Governments for public financial management, including procurement, budgeting, accounting, payment, and reporting. It involves loading a budget, loading a procurement plan, entering a requisition, and capturing the budget and procurement plan. Once a supplier is identified, a purchase order is captured in the system for payment purposes. The LPO is generated after the head of the procurement department approves the requisition The next stage is invoice generation, where an accountant matches the invoice with the purchase order. Another accountant confirms the invoice information and validates it. The invoice is then approved by another accountant who performs an Electronical Funds Transfer (EFT). The last part was the payment through the Internet Banking System (IBS). She further explained that the documents in the system move together with payment vouchers to verify the same. At the EFT stage, the accountant with payment credentials logs in and does the EFT, which means importation of the payment from IFMIS to Internet Banking Systemp(IBS). In this case, the Kshs.8,820,000 paid to Mediscope Agencies Ltd was processed six times on the IFMIS system.
16. She explained that the first part of the process involved a requisition No. 133, purchase order No.2340611, invoice for LPO No. 2340611, and payment by Chonyi C. on 25th June 2015. She stated that the second payment of Kshs.8,820,000 was done without an LPO. The invoice was validated by Mwangombe C on 12th August 2015, and later cancelled or voided in the IFMIS by Mkare G. The third payment had multiple voidances, with the first number being voided by Chonyi C.
17. In cross examination, she stated that the summary of transactions reveals that the IFMIS system does not make mistakes and provides accurate information. The system does not include the names of the 4th defendant, and the information provided does not include the supplier who supplied (in other words), the winner of the tender. The system only makes payments to parties entered in it, and Kisoi Dunda and Dankis are not mentioned. The system has users, and the first transaction was created by Justin Ndirangu Ngure on 18th August 2015. The first transaction was cancelled by Mkare G, and the user name assigned from the Health Department is unknown. BIGIFMIS is used for posting transactions to the general ledger, but it cannot create a transaction. Wangui's report contains the appointment letters for users who transacted on the platform in Kilifi County, but it was not addressed to the IFMIS department.
18. She further stated that the IFMIS system is a complex system that allows for the automatic creation of purchase orders after procurement and budget are uploaded. However, the system has been found to be porous and cannot stop payments that have already been made. The system allows four different users to create the same invoice, and there are no controls to ensure that this is not done. The system also allows for the creation of the same invoice for multiple suppliers. The system cannot determine if the transaction went through to the Internet Banking.
19. PW3, Judith Ngani Tsuma testified that she previously held the position of Director HR Kilifi County Government. They provided statements as evidence against various defendants, including a procurement officer, computer programmer, supply chain management assistant, head of supply chain management, clerical officer, finance department employee, accountant, and chief officer in-charge of finance. The information was retrieved from their personal files and provided to the Ethics and Anti-Corruption Commission (EACC).
20. On being cross examined she stated that her statement of the Defendants in the case is a summary of the proceedings. Stephen Sanga Barrawah (1st defendant), Sarah Musyimi (2nd defendant), David Kisoi Ndunda (3rd defendant), Justin Ndirangu Ngure (4th defendant) are all not mentioned while Ben Kai Chilimo (12th defendant) is mentioned. The 5th – 18th Defendants are identified as staff members. Mr. Matano (13th defendant), was a procurement officer and Head of Supply Chain Management. Kelvin Kigen Kieti (14th defendant) is not mentioned. The 15th defendant, Julius Munga, is not mentioned either as is the 17th defendant.
21. PW4, Peterson Gitari Muriuki, testified that he previously worked at the National Treasury IFMIS Department as Head of Business Processes in IFMIS – Accounts, Finance and Procurement. In his statement, he refers to several invoices and payments related to Mediscope, including invoices 1, 2, and 3. Invoice No. 1 was for Kshs.8,820,000/=, the gross payment, but after tax it was Kshs.8,336,373.10. Invoice No. 2 was for Kshs.8,820,000, the gross amount, but after payment, it was voided. Invoice No. 3 had an invoice for Kshs.8,200,000, the net amount, before tax. He also mentions a suspense account, a holding account used for accounts not directly charged to a budget. The IFMIS department provided this information to EACC. EACC had requested for the report, screenshots of the system, and a certificate. He stated that the IFMIS system is used to process payments, and it is the Central Bank which can know if the money went to the supplier’s account.
22. In cross examination he stated that the IFMIS system is configured for procurement processes, but it is not designed to capture subcontracts; that invoice No. 1 was paid on 25th June 2015, and invoice No. 2 was paid on 12th August 2015. The Central Bank is responsible for determining whether the money passed to the supplier; that the supplier’s role is to supply, while officers of the County Government handle the rest of the process. The system captures the procurement process, starting with an Approved Requisition, followed by a purchase order, validation, and payment; that the system is not configured to capture subcontracts, and the government is best suited to answer why it migrated to IFMIS. Further that the system captures three invoices, some direct, some procurement-based, and some non-procurement-based. He testified that Justin Ndirangu was the requisitioner for the first invoice, and the matching of the purchase order and invoice was done by Christine Mwaka. Validation was done by Baya G, and payment was done on 25th June 2015 by Choni C. The system is created with an audit trail, but users are expected to flag transactions. Invoice No. 3 was voided three times by Kilifi County officers, and the reasons for the transaction voiding are unclear. The system is not designed to flag transactions, and the use of the system raises questions about the system's functionality and the role of the officers involved. He acknowledged his expertise in IFMIS but could not confirm its 100% perfection. He mentioned several individuals who were involved in the installation of IFMIS in Kilifi County, but did not recall their involvement. He stated that he was responsible for system setups, coordination, and training county staff. He also assigned user rights, ensuring users could access the system and create their own accounts. The National Treasury had the mandate to operationalize the IFMIS system in counties.
23. PW5, Leonard Kapsanai, a senior manager in the Banking Services Division at the Central Bank of Kenya, testified that transactions in the IBS were authorized by two mandatory signatories, Raphael Mutiso and Benjamin Kai Chilumo. The second payment was made on 20th August, 2015, and the third payment was authorized by Raphael Kioli Mutiso and Paul Teido Mwazo. The documents he tendered were certified under Section 65 and 106B of the Evidence Act (MFI 22).
24. PW5 stated that the process for government payments involves three systems; the National Treasury's IFMIS systems, the Central Bank of Kenya's Internet Banking System, and the KEPSS (Kenya Electronic Payment and Settlement System) or the RTGS system. County government payments are verified and approved in the IFMIS system, which then uploads payments to the Internet Banking System. After approval, county governments access the system and execute two-pronged approvers. After approval, payments are placed in a queue and released to the KEPPS System. Commercial banks must then perform due diligence and credit customer accounts. The IFMIS system produces a payment file with unique information, which cannot be altered after which the money leaves the Central Bank into the payee's account. To transact in the Internet Banking System, counties appoint officers to fill a mandate and application form. These forms are accompanied by a cover letter and mandate form.
25. PW6, Jacob Oduor, a document/forensic examiner with 15 years of experience, currently working with the EACC produced a report filed on 26th November 2019. The report focuses on documentary evidence presented by Tabu Lwanga at the EACC lab. The documents included a payment voucher, inspection and acceptance certificate, and sample signatures of various individuals. Oduor found that the signatures on the AIE holder certificate, Raphael K. Mutisho, Justin Ngure, Richard Mwasumbu, and Hillary Murila were all by the same person. He prepared a four-page report, which he produced in evidence along with the exhibit memo form, payment voucher, inspection and acceptance certificate, and specimens.
26. In cross-examination he stated that he examined the disputed document, which focused on the signatures thereon. He found that the original payment voucher was the only document that had been examined. The signatures of Timothy Malingi and Justin were found to be the same, but the source of the document was not confirmed. He also found that the signatures were by the same author, and only the investigating officer could determine the source. He also noted that it is impossible to copy a signature to as near as possible, and that the signatures received were in original form.
27. PW7, Silas Utunga Ngoka, testified that he was working at the Central Bank of Kenya's IT Department, specifically the IT Department Section of core banking, which provides Internet Banking Services (IBS) to customers and end users; that the IB system is a platform for accessing accounts and transactions, with payments originating in IFMIS and progressing to Internet Banking. He explained that accreditation is a process where users are given user names and passwords to access the system. The bank is not wholly involved in the process, with business users handling the first part and the IBS handling the technical part. The transaction of Kshs.8,820,000/- involved Mutiso Raphael and Kaib, with the transaction dates being August 20th to September 24th, 2015. The bank is required to produce audit trails and certificates for the transactions.
28. He stated that the supplier's role is to supply but not to authorize payments. The transactions involved users who were accredited to access the platform, but the names of the suppliers were not confirmed. The system does not check documents for authenticity, as it is the county's responsibility to do so. Payments are made after the system’s appointed users have approved, and the County can cancel them in special circumstances.
29. PW8, Swabah Ahmed Omar, testified that he served as the County Executive Committee Member (CEC) for Health in Kilifi County Government from 2013 to 2015. During his term, he was not involved in procurement of mosquito nets, as reported by Chief Officer Timothy Malingi, and was not aware of any discussions concerning the same. He stated that the County's procurement function was not under the CEC's control and the role of Sarah Musyimi in procurement is unclear.
30. In cross examination PW8 testified that the CEC member for Health was responsible for policy decisions and procurement. The CEC, Heads of Department, Technical Teams, and the County Procurement Officer (CPO) were responsible for planning and budgeting. He stated that the procurement of mosquito nets was likely due to the endemic nature of malaria. The CEC was not involved in the procurement process, so they could not determine if the supply of mosquito nets was regular or regular. However, they did know that there was a budget for the fight against malaria, which was the role of the CPO.
31. PW9, Hamis Ndegwa testified that he worked under the scholarship fund. His role was to prepare cheques for beneficiaries of the fund; preparation of the cash book; bank reconciliation of the Fund account and any other role as assigned by the Fund Manager. He was not involved in any way with the procurement of mosquito nets. On cross examination he reiterated that he was not involved in procurement of mosquito nets and he did not sign the tender analysis report.
32. PW10, Abel Bahati Kitsao, a trader from Malindi testified that he, has been working with the County Government of Kilifi since 2019. He previously worked as a procurement officer and store keeper in the Finance Department. He claimed that whereas the documents indicate he received the nets on 11th June 2015, he did not receive the nets and the signatures on both documents are not his. On cross examination he stated that Kilifi has a malaria problem and people require mosquito nets. The county used to purchase nets, but the delivery of those nets was unclear. In 2015, goods were initially received in one central store, but later departments got their own stores; that, the delivery note and counter receipt vouchers were not signed by him; that, Khadija Ali Abdula, a lorry supplier, was informed that the nets were distributed to users; that, he was not aware of the lorry's proprietors or the origin of the delivery note and that Mediscope was mentioned, but the nets were not delivered to the store.
33. PW11, Regena Ng'ang'a, an investigator for EACC, testified that they received a report that the County Government of Kilifi lost Kshs. 252 million between July 2015 and December 2015, due to irregular payment for goods and services not rendered; Mediscope Agencies Ltd was one of the companies that was irregularly paid; the EACC Malindi office requested for information from the Registrar of Companies on 26th February 2016; that investigations confirmed that Mediscope was irregularly paid a total of Kshs.26,460,000 through Account No. 0450262447332 Equity Bank, Malindi Branch; the money was paid in three tranches of Kshs.8,820,000 on 3rd July 2015, 20th August 2015 and 24th September 2015.The bank statement for Mediscope Agencies for the period 11th January, 2014 to 25th January, 2017 was obtained, as were documents in respect to the payments. The bank statement established that the three payments were indeed made.
34. She further testified that from the bank statement, it was established that Alex Kitheka Mwongela received Kshs.400,000 from Mediscope Agencies through an RTF transfer on 17th June 2015. Mediscope transferred Kshs. 1 million to the Dunkies Agencies account at Equity Bank on 6th July 2015. On 7th July 2015, a cheque was written in favor of Sarah Musyimi of Kshs. 2 million, and on 8th July 2015, a cheque was written to Sarah Musyimi for Kshs.300,000. On 10th July 2023, another cheque was written for Kshs. 500,000, and on 25th August 2015, another cheque for Kshs.3,500,000. The County Government of Kilifi had been accused of irregular payment for goods and services not rendered, with Mediscope Agencies Ltd being one of the companies alleged to have been involved. The Mediscope Agencies Account was opened on May 23, 2014, with proprietor director Stephen Barrawah as the sole signatory. The account opening form, KRA Pin, registration documents, tax compliance certificates, single business permits, and identity cards were obtained and produced as exhibits.
35. In cross examination PW11 testified that as a forensic investigator, the case she audited involved the loss of Kshs. 252 million. She found that Mediscope Agencies Limited was registered for general supplies and had one proprietor. She conducted investigations into the proprietorship of Mediscope Agencies Limited and established that the proprietor was Stephen Sanga Barrawah. Three payments were made to Mediscope Agencies, purportedly for long lasting insecticide treatment mosquito nets. She obtained supporting documents for one payment only but not for the other two payments. She investigated the authenticity of the voucher and supporting documents and found some originated from the County Government of Kilifi. She stated that the counter receipt voucher was not authentic, and the officer who received the goods did not sign it and that the delivery note should have been signed by the officer who received the goods. She conceded that it is beyond the supplier's role to authenticate the documents they receive from the County Government. She stated that she interviewed Khadija, who claimed she had not received the mosquito nets; that, the head of procurement is the custodian of procurement documents, and the failure to produce the documents should be blamed on that department but not the suppliers.
36. PW12, Tabu Lwanga, testified that he was investigator with the EACC, that he conducted investigations involving the three payments made to Mediscope Agencies by the Kilifi County Government. The payments were of similar amounts, of totaling Kshs.8,820,000/= on 3rd July 2015, 20th August 2015 and 24th September 2015. The evidence established that there was no supply of mosquito nets, forged evaluation reports, and missing documents and that a single payment voucher with attachments was used for the three payments. Further that the 5th to 18th Defendants played a role in the loss. He contended that there were no fraud-related charges preferred against the 11th to 18th defendants. He conceded that the threshold for fraud is proof beyond reasonable doubt. He also contended that Mkare was responsible for voiding the payments in IFMIS and that everyone who participated in the transactions was sued. However, Mwaka C is not a defendant, and that Daniel Thoya Hitha's credentials were used without his authority. he also stated that Consolata Choni Ngala is not a defendant, and Richard Mwasambu may have played a role in the procurement but did not play a role in IFMIS or Internet Banking. He urged this court to rule in favour of the plaintiff.
The Defence case
37. The Defendants denied every allegation contained in the Plaint and averred that the Plaint does not raise any reasonable cause of action against them and ought to be dismissed and that the Plaintiff is not entitled to the prayers sought in the plaint. In addition to their written statements, some of the Defendants also testified in court as follows:
38. DW1, Stephen Sanga Barawah, the proprietor of Mediscope Agencies and sole director of Barawah Limited, filed the registration certificate, incorporation certificate, tender analysis report, and bid document.
39. In Cross examination he stated that Mediscope Agencies was a sole proprietorship that was transformed into Mediscope Agencies Limited in 2018. The company's nature of business was general supplies, Mediscope Agencies was among the suppliers who were prequalified for medical supplies in 2014. He has not filed any notice or advert by Kilifi county. They were invited to apply for a tender in March 2015 and received a general invitation letter to bid. He was informed that they were successful in their bid and wrote an acceptance letter, but the acceptance is not included in the documents filed in court. He had not filed any proof of being pre-qualified for a specific tender. He received an LPO (Local Purchase Order) on 10th April 2015, which was signed on 18th April 2015. The contract was for the supply of 6000 mosquito nets in three lots. He supplied the nets to the Kilifi County Government. He produced the minutes of the Tender Committee meeting held on 9th April 2015, which confirmed the award.
40. DW2, David Maangi Kithunga, a businessman from Malindi testified on behalf of Serah Musyimi. He stated that he had a power of attorney to testify and is aware of Serah Musyimi's witness statements. He requested that the 2nd Defendant be exonerated as she was not part of the 1st Defendant and his company Mediscope Agencies. She loaned money to the 1st Defendant, amounting to Kshs. 24 million, and has nothing to do with the supply of mosquito nets.
41. DW3, Richard Polo Masambu, a computer programmer at Kilifi County Government defended himself against allegations of conspiring with others to defraud the County, arguing that he merely did what was required; that this case involved a tender for supply of 6000 mosquito nets, and Hillary Mulira, Justin Ndirangu Ngure and himself were appointed to the Inspection and Acceptance Committee after the nets were delivered and inspected at the hospital store. He stated that the batch had 6000 nets, and he was unaware of how the nets were procured. They signed an Inspection and Acceptance certificate dated 11th June 2015 for 6000 long-lasting insecticide-treated nets. He stated that the committee came at the last stage after other tasks had been completed. He denied knowing David Ndunda or Dankies Agencies or that they received instructions from Benjamin Kai Chilumo.
42. DW4, Ramael Kioli Mutio, testified that he worked with the County Government and retired in 2016. He served as Approver 1 in Internet Banking, receiving processed vouchers from the examination section and signing them for approval. He was deployed by the Chief Officer Finance to oversee the platform and ensure the necessary documents were present. He stated that in regard to this case he was Approver 1.
43. His responsibility was to verify the authenticity of documents and ensuring they were signed by the relevant officers; that they received numerous vouchers through a register and checked their contents before approving them. He did not associate with the 2nd Defendant or receive any money sent by the 2nd Defendant. They did not associate with the 4th Defendant or Dankies Agencies. He was Approver 1 for a short period. His role was to check the presence of relevant attachments and verify their veracity. If a voucher did not have the necessary documents, they would refer it back to the relevant department.
44. DW5, Sophia Mnyamanyi Mwandawiro, 10th Defendant, testified that she was working with the Kilifi County Government's Education Department, Scholarship Section but at the material time she was Approver in the IFMIS. She stated that she was responsible for invoicing, which involved posting a voucher to the IFMIS. The invoice is not the same as checking if a supplier is registered in the system. Her role was to capture the document prepared by the supplier and validate it. She was not required to check if the voucher had gone through the examination process, as that was done in the user department. She stated that she was not involved in the payment process for Mediscope Agencies and was not aware of any role Sarah Musyimi played in the supply of nets. She denied receiving any money from Sarah Musyimi post 2015 and denied that she conspired with her in relation to money illegally acquired from the Count government of Kilifi.
45. DW6 Alex, Kitheka Mwongela, an ICT Department employee at Kilifi County Government, the 8th defendant, vehemently denied that he was involved in the transaction that led to the three payments.
46. DW7, Gilbert MBAYA, revisited a statement from October 15, 2018, stating that he validated two vouchers in a case involving the IFMIS. He argued that if the voucher codes and system codes match, insufficient funds could prevent the voucher from proceeding to the next stage. He acknowledged validating two invoices, comparing the physical vouchers to the system's codes. He denied conspiring with Sarah Musyimi to defraud the County Government of Kilifi and stated that he had no knowledge of any role she played in the tender. He also confirmed that he saw the requisite documents but was not responsible for preparing or entering them in the IFMIS.
47. DW8 Mwatela Mwasewu, an accountant at Kilifi County Government, recorded a witness statement on October 15, 2018, stating that as approvers they made payments in IFMIS by obtaining physical vouchers from validators, comparing them with the documents in the IFMIS, and marking them as "paid
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2. The Plaintiff claims the said sum of Kshs 24,460,000 together with interest. It also prays for the costs of this suit
The Parties
3. The Plaintiff is a Body Corporate established under Section 3 of the Ethics & Anti-Corruption Commission Act. It is mandated to Institute and conduct proceedings for the purpose of recovery or protection of public property.
4. The 1st Defendant is an adult of sound mind trading in the name and style of Mediscope Agencies a business name registered under the Registration of Business Names Act. He was also the director of the 3rd defendant.
5. The 2nd Defendant was at all material times an adult of sound mind who resided within the republic of Kenya.
6. The 3rd Defendant was at all times to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
7. The 4th Defendant was at all times of the suit trading in the name and style of Dankies Agencies a business name registered in Kenya under the Registration of Business Names Act and carrying out business in Nairobi within the Republic of Kenya.
8. The 5th – 18th Defendants were at all material times to this suit employees of the County Government of Kilifi.
9. The 19th Defendant was at all times relevant to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
10. The 20th Defendant was at all times relevant to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
11. The 21st Defendant was at all times relevant to the suit a limited liability company incorporated in the Republic of Kenya and carrying out business in Nairobi within the Republic of Kenya.
The Plaintiff’s case
12. The Plaintiff avers that it launched investigations into the allegations that the County Government of Kilifi irregularly paid public funds of Kshs. 26,460,000 to Mediscope Agencies in respect of procurement of 6000 pieces of long lasting insecticide treated nets during the financial year 2015/2016 and established that the Defendants jointly and severally facilitated and willfully participated in a corrupt enterprise with the corrupt aim of fraudulently acquiring public funds from the County government of Kilifi through fraudulent and corrupt means; that the 1st Defendant received Kshs. 8,820,000 from the County Government on three different dates 3rd July 2015, 20th August 2015 and 24th September 2015 in his bank account number 0450262447332 through fraudulent and corrupt practice in respect of procurement of 6000 pieces of long lasting insecticide treated nets; that the 1st, 2nd and 4th Defendants through a joint fraudulent scheme and corrupt enterprise unlawfully acquired public funds of kshs 24,460,000 through bank account 0450262447332 at Equity bank in the name of the 1st Defendant thereby causing substantial damage and adverse pecuniary prejudice to the County Government of Kilifi and that the 1st, 2nd and 4th Defendants through a joint fraudulent scheme and corrupt enterprise unlawfully acquired public funds of kshs 24,460,000 from the County Government of Kilifi thereby unjustly enriching themselves to the financial detriment of the government of Kenya.
13. Further that the 5th, 6th 7th,8th, 9th 10th 11th, 13th ,14th 15th 16th 17th and 18th Defendants as public officers and in their respective course of employment were jointly and severally negligent in respect to the procurement of 6000 pieces of long lasting insecticides treated nets thus leading to illegal and fraudulent loss of public funds in the sum of Kshs. 24,460,000 to the detriment of the County Government of Kilifi.
14. To prove its case, the Plaintiff called the following witnesses: — PW1, Keziah Wangui, testified that she conducted a special audit at the request of Chief Finance Officer, Benjamin Kaai (the 12th Defendant). She investigated several vouchers, particularly one for Kshs. 8,820,000 payment to Mediscope Agencies and discovered three such payments made using the same LPO number. Two payments were cancelled in Integrated Financial Management Information System (IFMIS) but still processed through the Central Bank of Kenya (CBK) Internet Banking System. She stated that only one payment voucher was available and properly documented. The other two lacked supporting documents. Her report also flagged “below-the-line transactions” payments made without corresponding budget votes. She recommended a forensic audit, which was never done. In cross examination she stated that she could not confirm physical delivery of the mosquito nets. Audit relied purely on available documents, and no physical stock verification was done. The delivery note and invoice were dated before the LPO issuance, hence raising doubts and the IFMIS reference number REC/0000619536 corresponded to at least two payments instead of one.
15. PW2, Maureen Kimeli, testified that she was an accountant with experience in the National Government's Finance department and IFMIS Department. She briefly explained how IFMIS is a system used by the National and County Governments for public financial management, including procurement, budgeting, accounting, payment, and reporting. It involves loading a budget, loading a procurement plan, entering a requisition, and capturing the budget and procurement plan. Once a supplier is identified, a purchase order is captured in the system for payment purposes. The LPO is generated after the head of the procurement department approves the requisition The next stage is invoice generation, where an accountant matches the invoice with the purchase order. Another accountant confirms the invoice information and validates it. The invoice is then approved by another accountant who performs an Electronical Funds Transfer (EFT). The last part was the payment through the Internet Banking System (IBS). She further explained that the documents in the system move together with payment vouchers to verify the same. At the EFT stage, the accountant with payment credentials logs in and does the EFT, which means importation of the payment from IFMIS to Internet Banking Systemp(IBS). In this case, the Kshs.8,820,000 paid to Mediscope Agencies Ltd was processed six times on the IFMIS system.
16. She explained that the first part of the process involved a requisition No. 133, purchase order No.2340611, invoice for LPO No. 2340611, and payment by Chonyi C. on 25th June 2015. She stated that the second payment of Kshs.8,820,000 was done without an LPO. The invoice was validated by Mwangombe C on 12th August 2015, and later cancelled or voided in the IFMIS by Mkare G. The third payment had multiple voidances, with the first number being voided by Chonyi C.
17. In cross examination, she stated that the summary of transactions reveals that the IFMIS system does not make mistakes and provides accurate information. The system does not include the names of the 4th defendant, and the information provided does not include the supplier who supplied (in other words), the winner of the tender. The system only makes payments to parties entered in it, and Kisoi Dunda and Dankis are not mentioned. The system has users, and the first transaction was created by Justin Ndirangu Ngure on 18th August 2015. The first transaction was cancelled by Mkare G, and the user name assigned from the Health Department is unknown. BIGIFMIS is used for posting transactions to the general ledger, but it cannot create a transaction. Wangui's report contains the appointment letters for users who transacted on the platform in Kilifi County, but it was not addressed to the IFMIS department.
18. She further stated that the IFMIS system is a complex system that allows for the automatic creation of purchase orders after procurement and budget are uploaded. However, the system has been found to be porous and cannot stop payments that have already been made. The system allows four different users to create the same invoice, and there are no controls to ensure that this is not done. The system also allows for the creation of the same invoice for multiple suppliers. The system cannot determine if the transaction went through to the Internet Banking.
19. PW3, Judith Ngani Tsuma testified that she previously held the position of Director HR Kilifi County Government. They provided statements as evidence against various defendants, including a procurement officer, computer programmer, supply chain management assistant, head of supply chain management, clerical officer, finance department employee, accountant, and chief officer in-charge of finance. The information was retrieved from their personal files and provided to the Ethics and Anti-Corruption Commission (EACC).
20. On being cross examined she stated that her statement of the Defendants in the case is a summary of the proceedings. Stephen Sanga Barrawah (1st defendant), Sarah Musyimi (2nd defendant), David Kisoi Ndunda (3rd defendant), Justin Ndirangu Ngure (4th defendant) are all not mentioned while Ben Kai Chilimo (12th defendant) is mentioned. The 5th – 18th Defendants are identified as staff members. Mr. Matano (13th defendant), was a procurement officer and Head of Supply Chain Management. Kelvin Kigen Kieti (14th defendant) is not mentioned. The 15th defendant, Julius Munga, is not mentioned either as is the 17th defendant.
21. PW4, Peterson Gitari Muriuki, testified that he previously worked at the National Treasury IFMIS Department as Head of Business Processes in IFMIS – Accounts, Finance and Procurement. In his statement, he refers to several invoices and payments related to Mediscope, including invoices 1, 2, and 3. Invoice No. 1 was for Kshs.8,820,000/=, the gross payment, but after tax it was Kshs.8,336,373.10. Invoice No. 2 was for Kshs.8,820,000, the gross amount, but after payment, it was voided. Invoice No. 3 had an invoice for Kshs.8,200,000, the net amount, before tax. He also mentions a suspense account, a holding account used for accounts not directly charged to a budget. The IFMIS department provided this information to EACC. EACC had requested for the report, screenshots of the system, and a certificate. He stated that the IFMIS system is used to process payments, and it is the Central Bank which can know if the money went to the supplier’s account.
22. In cross examination he stated that the IFMIS system is configured for procurement processes, but it is not designed to capture subcontracts; that invoice No. 1 was paid on 25th June 2015, and invoice No. 2 was paid on 12th August 2015. The Central Bank is responsible for determining whether the money passed to the supplier; that the supplier’s role is to supply, while officers of the County Government handle the rest of the process. The system captures the procurement process, starting with an Approved Requisition, followed by a purchase order, validation, and payment; that the system is not configured to capture subcontracts, and the government is best suited to answer why it migrated to IFMIS. Further that the system captures three invoices, some direct, some procurement-based, and some non-procurement-based. He testified that Justin Ndirangu was the requisitioner for the first invoice, and the matching of the purchase order and invoice was done by Christine Mwaka. Validation was done by Baya G, and payment was done on 25th June 2015 by Choni C. The system is created with an audit trail, but users are expected to flag transactions. Invoice No. 3 was voided three times by Kilifi County officers, and the reasons for the transaction voiding are unclear. The system is not designed to flag transactions, and the use of the system raises questions about the system's functionality and the role of the officers involved. He acknowledged his expertise in IFMIS but could not confirm its 100% perfection. He mentioned several individuals who were involved in the installation of IFMIS in Kilifi County, but did not recall their involvement. He stated that he was responsible for system setups, coordination, and training county staff. He also assigned user rights, ensuring users could access the system and create their own accounts. The National Treasury had the mandate to operationalize the IFMIS system in counties.
23. PW5, Leonard Kapsanai, a senior manager in the Banking Services Division at the Central Bank of Kenya, testified that transactions in the IBS were authorized by two mandatory signatories, Raphael Mutiso and Benjamin Kai Chilumo. The second payment was made on 20th August, 2015, and the third payment was authorized by Raphael Kioli Mutiso and Paul Teido Mwazo. The documents he tendered were certified under Section 65 and 106B of the Evidence Act (MFI 22).
24. PW5 stated that the process for government payments involves three systems; the National Treasury's IFMIS systems, the Central Bank of Kenya's Internet Banking System, and the KEPSS (Kenya Electronic Payment and Settlement System) or the RTGS system. County government payments are verified and approved in the IFMIS system, which then uploads payments to the Internet Banking System. After approval, county governments access the system and execute two-pronged approvers. After approval, payments are placed in a queue and released to the KEPPS System. Commercial banks must then perform due diligence and credit customer accounts. The IFMIS system produces a payment file with unique information, which cannot be altered after which the money leaves the Central Bank into the payee's account. To transact in the Internet Banking System, counties appoint officers to fill a mandate and application form. These forms are accompanied by a cover letter and mandate form.
25. PW6, Jacob Oduor, a document/forensic examiner with 15 years of experience, currently working with the EACC produced a report filed on 26th November 2019. The report focuses on documentary evidence presented by Tabu Lwanga at the EACC lab. The documents included a payment voucher, inspection and acceptance certificate, and sample signatures of various individuals. Oduor found that the signatures on the AIE holder certificate, Raphael K. Mutisho, Justin Ngure, Richard Mwasumbu, and Hillary Murila were all by the same person. He prepared a four-page report, which he produced in evidence along with the exhibit memo form, payment voucher, inspection and acceptance certificate, and specimens.
26. In cross-examination he stated that he examined the disputed document, which focused on the signatures thereon. He found that the original payment voucher was the only document that had been examined. The signatures of Timothy Malingi and Justin were found to be the same, but the source of the document was not confirmed. He also found that the signatures were by the same author, and only the investigating officer could determine the source. He also noted that it is impossible to copy a signature to as near as possible, and that the signatures received were in original form.
27. PW7, Silas Utunga Ngoka, testified that he was working at the Central Bank of Kenya's IT Department, specifically the IT Department Section of core banking, which provides Internet Banking Services (IBS) to customers and end users; that the IB system is a platform for accessing accounts and transactions, with payments originating in IFMIS and progressing to Internet Banking. He explained that accreditation is a process where users are given user names and passwords to access the system. The bank is not wholly involved in the process, with business users handling the first part and the IBS handling the technical part. The transaction of Kshs.8,820,000/- involved Mutiso Raphael and Kaib, with the transaction dates being August 20th to September 24th, 2015. The bank is required to produce audit trails and certificates for the transactions.
28. He stated that the supplier's role is to supply but not to authorize payments. The transactions involved users who were accredited to access the platform, but the names of the suppliers were not confirmed. The system does not check documents for authenticity, as it is the county's responsibility to do so. Payments are made after the system’s appointed users have approved, and the County can cancel them in special circumstances.
29. PW8, Swabah Ahmed Omar, testified that he served as the County Executive Committee Member (CEC) for Health in Kilifi County Government from 2013 to 2015. During his term, he was not involved in procurement of mosquito nets, as reported by Chief Officer Timothy Malingi, and was not aware of any discussions concerning the same. He stated that the County's procurement function was not under the CEC's control and the role of Sarah Musyimi in procurement is unclear.
30. In cross examination PW8 testified that the CEC member for Health was responsible for policy decisions and procurement. The CEC, Heads of Department, Technical Teams, and the County Procurement Officer (CPO) were responsible for planning and budgeting. He stated that the procurement of mosquito nets was likely due to the endemic nature of malaria. The CEC was not involved in the procurement process, so they could not determine if the supply of mosquito nets was regular or regular. However, they did know that there was a budget for the fight against malaria, which was the role of the CPO.
31. PW9, Hamis Ndegwa testified that he worked under the scholarship fund. His role was to prepare cheques for beneficiaries of the fund; preparation of the cash book; bank reconciliation of the Fund account and any other role as assigned by the Fund Manager. He was not involved in any way with the procurement of mosquito nets. On cross examination he reiterated that he was not involved in procurement of mosquito nets and he did not sign the tender analysis report.
32. PW10, Abel Bahati Kitsao, a trader from Malindi testified that he, has been working with the County Government of Kilifi since 2019. He previously worked as a procurement officer and store keeper in the Finance Department. He claimed that whereas the documents indicate he received the nets on 11th June 2015, he did not receive the nets and the signatures on both documents are not his. On cross examination he stated that Kilifi has a malaria problem and people require mosquito nets. The county used to purchase nets, but the delivery of those nets was unclear. In 2015, goods were initially received in one central store, but later departments got their own stores; that, the delivery note and counter receipt vouchers were not signed by him; that, Khadija Ali Abdula, a lorry supplier, was informed that the nets were distributed to users; that, he was not aware of the lorry's proprietors or the origin of the delivery note and that Mediscope was mentioned, but the nets were not delivered to the store.
33. PW11, Regena Ng'ang'a, an investigator for EACC, testified that they received a report that the County Government of Kilifi lost Kshs. 252 million between July 2015 and December 2015, due to irregular payment for goods and services not rendered; Mediscope Agencies Ltd was one of the companies that was irregularly paid; the EACC Malindi office requested for information from the Registrar of Companies on 26th February 2016; that investigations confirmed that Mediscope was irregularly paid a total of Kshs.26,460,000 through Account No. 0450262447332 Equity Bank, Malindi Branch; the money was paid in three tranches of Kshs.8,820,000 on 3rd July 2015, 20th August 2015 and 24th September 2015.The bank statement for Mediscope Agencies for the period 11th January, 2014 to 25th January, 2017 was obtained, as were documents in respect to the payments. The bank statement established that the three payments were indeed made.
34. She further testified that from the bank statement, it was established that Alex Kitheka Mwongela received Kshs.400,000 from Mediscope Agencies through an RTF transfer on 17th June 2015. Mediscope transferred Kshs. 1 million to the Dunkies Agencies account at Equity Bank on 6th July 2015. On 7th July 2015, a cheque was written in favor of Sarah Musyimi of Kshs. 2 million, and on 8th July 2015, a cheque was written to Sarah Musyimi for Kshs.300,000. On 10th July 2023, another cheque was written for Kshs. 500,000, and on 25th August 2015, another cheque for Kshs.3,500,000. The County Government of Kilifi had been accused of irregular payment for goods and services not rendered, with Mediscope Agencies Ltd being one of the companies alleged to have been involved. The Mediscope Agencies Account was opened on May 23, 2014, with proprietor director Stephen Barrawah as the sole signatory. The account opening form, KRA Pin, registration documents, tax compliance certificates, single business permits, and identity cards were obtained and produced as exhibits.
35. In cross examination PW11 testified that as a forensic investigator, the case she audited involved the loss of Kshs. 252 million. She found that Mediscope Agencies Limited was registered for general supplies and had one proprietor. She conducted investigations into the proprietorship of Mediscope Agencies Limited and established that the proprietor was Stephen Sanga Barrawah. Three payments were made to Mediscope Agencies, purportedly for long lasting insecticide treatment mosquito nets. She obtained supporting documents for one payment only but not for the other two payments. She investigated the authenticity of the voucher and supporting documents and found some originated from the County Government of Kilifi. She stated that the counter receipt voucher was not authentic, and the officer who received the goods did not sign it and that the delivery note should have been signed by the officer who received the goods. She conceded that it is beyond the supplier's role to authenticate the documents they receive from the County Government. She stated that she interviewed Khadija, who claimed she had not received the mosquito nets; that, the head of procurement is the custodian of procurement documents, and the failure to produce the documents should be blamed on that department but not the suppliers.
36. PW12, Tabu Lwanga, testified that he was investigator with the EACC, that he conducted investigations involving the three payments made to Mediscope Agencies by the Kilifi County Government. The payments were of similar amounts, of totaling Kshs.8,820,000/= on 3rd July 2015, 20th August 2015 and 24th September 2015. The evidence established that there was no supply of mosquito nets, forged evaluation reports, and missing documents and that a single payment voucher with attachments was used for the three payments. Further that the 5th to 18th Defendants played a role in the loss. He contended that there were no fraud-related charges preferred against the 11th to 18th defendants. He conceded that the threshold for fraud is proof beyond reasonable doubt. He also contended that Mkare was responsible for voiding the payments in IFMIS and that everyone who participated in the transactions was sued. However, Mwaka C is not a defendant, and that Daniel Thoya Hitha's credentials were used without his authority. he also stated that Consolata Choni Ngala is not a defendant, and Richard Mwasambu may have played a role in the procurement but did not play a role in IFMIS or Internet Banking. He urged this court to rule in favour of the plaintiff.
The Defence case
37. The Defendants denied every allegation contained in the Plaint and averred that the Plaint does not raise any reasonable cause of action against them and ought to be dismissed and that the Plaintiff is not entitled to the prayers sought in the plaint. In addition to their written statements, some of the Defendants also testified in court as follows:
38. DW1, Stephen Sanga Barawah, the proprietor of Mediscope Agencies and sole director of Barawah Limited, filed the registration certificate, incorporation certificate, tender analysis report, and bid document.
39. In Cross examination he stated that Mediscope Agencies was a sole proprietorship that was transformed into Mediscope Agencies Limited in 2018. The company's nature of business was general supplies, Mediscope Agencies was among the suppliers who were prequalified for medical supplies in 2014. He has not filed any notice or advert by Kilifi county. They were invited to apply for a tender in March 2015 and received a general invitation letter to bid. He was informed that they were successful in their bid and wrote an acceptance letter, but the acceptance is not included in the documents filed in court. He had not filed any proof of being pre-qualified for a specific tender. He received an LPO (Local Purchase Order) on 10th April 2015, which was signed on 18th April 2015. The contract was for the supply of 6000 mosquito nets in three lots. He supplied the nets to the Kilifi County Government. He produced the minutes of the Tender Committee meeting held on 9th April 2015, which confirmed the award.
40. DW2, David Maangi Kithunga, a businessman from Malindi testified on behalf of Serah Musyimi. He stated that he had a power of attorney to testify and is aware of Serah Musyimi's witness statements. He requested that the 2nd Defendant be exonerated as she was not part of the 1st Defendant and his company Mediscope Agencies. She loaned money to the 1st Defendant, amounting to Kshs. 24 million, and has nothing to do with the supply of mosquito nets.
41. DW3, Richard Polo Masambu, a computer programmer at Kilifi County Government defended himself against allegations of conspiring with others to defraud the County, arguing that he merely did what was required; that this case involved a tender for supply of 6000 mosquito nets, and Hillary Mulira, Justin Ndirangu Ngure and himself were appointed to the Inspection and Acceptance Committee after the nets were delivered and inspected at the hospital store. He stated that the batch had 6000 nets, and he was unaware of how the nets were procured. They signed an Inspection and Acceptance certificate dated 11th June 2015 for 6000 long-lasting insecticide-treated nets. He stated that the committee came at the last stage after other tasks had been completed. He denied knowing David Ndunda or Dankies Agencies or that they received instructions from Benjamin Kai Chilumo.
42. DW4, Ramael Kioli Mutio, testified that he worked with the County Government and retired in 2016. He served as Approver 1 in Internet Banking, receiving processed vouchers from the examination section and signing them for approval. He was deployed by the Chief Officer Finance to oversee the platform and ensure the necessary documents were present. He stated that in regard to this case he was Approver 1.
43. His responsibility was to verify the authenticity of documents and ensuring they were signed by the relevant officers; that they received numerous vouchers through a register and checked their contents before approving them. He did not associate with the 2nd Defendant or receive any money sent by the 2nd Defendant. They did not associate with the 4th Defendant or Dankies Agencies. He was Approver 1 for a short period. His role was to check the presence of relevant attachments and verify their veracity. If a voucher did not have the necessary documents, they would refer it back to the relevant department.
44. DW5, Sophia Mnyamanyi Mwandawiro, 10th Defendant, testified that she was working with the Kilifi County Government's Education Department, Scholarship Section but at the material time she was Approver in the IFMIS. She stated that she was responsible for invoicing, which involved posting a voucher to the IFMIS. The invoice is not the same as checking if a supplier is registered in the system. Her role was to capture the document prepared by the supplier and validate it. She was not required to check if the voucher had gone through the examination process, as that was done in the user department. She stated that she was not involved in the payment process for Mediscope Agencies and was not aware of any role Sarah Musyimi played in the supply of nets. She denied receiving any money from Sarah Musyimi post 2015 and denied that she conspired with her in relation to money illegally acquired from the Count government of Kilifi.
45. DW6 Alex, Kitheka Mwongela, an ICT Department employee at Kilifi County Government, the 8th defendant, vehemently denied that he was involved in the transaction that led to the three payments.
46. DW7, Gilbert MBAYA, revisited a statement from October 15, 2018, stating that he validated two vouchers in a case involving the IFMIS. He argued that if the voucher codes and system codes match, insufficient funds could prevent the voucher from proceeding to the next stage. He acknowledged validating two invoices, comparing the physical vouchers to the system's codes. He denied conspiring with Sarah Musyimi to defraud the County Government of Kilifi and stated that he had no knowledge of any role she played in the tender. He also confirmed that he saw the requisite documents but was not responsible for preparing or entering them in the IFMIS.
47. DW8 Mwatela Mwasewu, an accountant at Kilifi County Government, recorded a witness statement on October 15, 2018, stating that as approvers they made payments in IFMIS by obtaining physical vouchers from validators, comparing them with the documents in the IFMIS, and marking them as "paid
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