IMF push for tenderers to list company owners

Friday, July 22nd, 2022 04:10 | By
International Monetary Fund. PHOTO/Courtesy

Kenya will start publishing the beneficial owners of companies awarded State tenders, yielding to pressure from the International Monetary Fund (IMF), to enhance transparency through the electronic government procurement system.

The feat is part of the Bretton Woods institution’s loans programme attached to a $2.34 billion (Sh276 billion) loan which is being released in tranches.

Kenya was expected to, among others, reform State-owned Enterprises (SEOs), conduct a special audit on Covid-19 expenditure and enforce wealth declaration by public servants to access the portion of the 38-month budget support deal signed in April 2021 under the Special Drawing Right (SDR).

“With the adoption of the beneficial owners’ consent form to be included in standard bidding documents for public procurements, tender notices issued effective from April 21, 2022, onwards are required to use the revised bidding documents,” IMF said in a report.

The IMF board approved a $235.6 million (Sh27.8 billion) for budgetary support during a meeting on Tuesday.

Change of tack

The move by the global lender is meant to change tack in the fight against corruption to deepen transparency in Kenya’s tendering system to replace lengthy court processes which have since been abused.

Successful tenders should be published on the Public Procurement Information Portal (PPIP) by the 15th day of the subsequent month per the procurement regulations.

In June last year, IMF demanded an audit of Covid-19 funds embezzlement at the State drugs agency, Kenya Medical Supplies Agency (Kemsa) following the Sh173 billion it gave Kenya between March 2020 and December 2021, to fund vaccination drives.

KEMSA has since then revamped publishing the names of firms and shareholders with tenders on its portal but there are still gaps. For instance, there are no mentions of tender evaluators and reasons behind picking a particular firm as required in open tender processes.

Antoinette M. Sayeh Deputy Managing Director of the IMF who chaired Kenya’s meeting wants the same trend to cut across all the State-owned enterprises (SEOs) to improve financial oversight, anti-corruption framework, anti-money laundering and combat financing terrorism.

Rush to beat deadline

The lender’s directive comes amid a rush by private companies to beat the July deadline to declare and update the beneficial owners’ information with the company registry to evade hefty fines.

“You are further reminded that the obligation to lodge a register of beneficial owners is continuous and any amendment made to the register must be reported 14 days of the amendment,” the registrar of companies Joyce Koech said in a compliance notice to companies.

The deadline of the disclosure rule, which is pegged under the Companies Act 2015 was put in place last October to combat illicit wealth, money laundering and corruption.

Firms must disclose shareholders’ names, ID/passport, address, contact, profession, and ownership data.

Though lagging behind, Kenya is implementing the anti-corruption framework under the IMF structural benchmark, which is a condition for accessing loans. The lender considers an effective follow-up of expenditure audits for transparency and accountability as important.

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