REPUBLIC OF KENYA

THE JUDICIARY

HIGHLIGHTS OF FINDINGS OF THE JUDICIAL SERVIVE COMMISSION ON INVESTIGATIONS ON THE CHIEF REGISTRAR OF THE JUDICIARY

On September 9, 2013, the Judicial Service Commission served the Chief Registrar of the Judiciary, Mrs Gladys Boss Shollei, with 87 allegations touching on financial and human resource mismanagement, irregularities and illegalities in procurement, and misbehaviour. In her responses, filed on October 1, 2013 and subsequently amended on October 15, Mrs Shollei admitted 33 allegations and denied 38 others. Responses to the other 16 allegations balance were equivocal and qualified. The financial outlay in the allegations against Mrs Shollei stands at Ksh2,207,400,000: Those she admitted are estimated to be valued at Ksh1,696,000,000 while those she denied stands at a value of Ksh250,400,000 and Ksh361,000,000 where there are mixed responses. The following are the highlights of the JSCs findings after investigations. The full report is on the judiciary website, www.judiciary.go.ke 1. Leasing of Elgon Place The Commission was concerned about whether there was a valid contract to warrant the payment of hundreds of millions of shillings to lease the Elgon Place premises.
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An Internal Audit Report shows that Sealink Holdings, the proprietors of Elgon Place, was paid by the Judiciary Headquarters Ksh42,066,988.60 (USD 371,259.85 at Central Bank of Kenya exchange rate of approximately Ksh.87.60) and Ksh.9,539,687.70 being rental fees for three (3) months.

At the same time, the Judiciary, through the Judiciary Training Institute, paid Sealink Holdings Ksh43,250,082.10 at KCB exchange rate of approximately Ksh.90.80, thus occasioning additional costs of Ksh.1,183,093.50 as foreign exchange expenses. Payment in foreign currency is against government financial regulations unless authority is obtained from Treasury. The CRJ did not provide sufficient justification and evidence of authority from Treasury to make the payments to Sealink in foreign currency in line with government financial regulations. Payments were made of security deposits contrary to Government Financial Regulations amounting to USD 171,880.20 (Ksh2,873,400/=). The payment of security deposit was a pre-payment that contravenes Section 5.4.1 of the Government Financial Regulations. Payment of service charge of Ksh3,333,144/= was done even when the Judiciary was the sole tenant and the landlord was not providing services.

The CRJ admitted in her response that Sealink Holdings was paid double rent from the Judiciary Headquarters and the JTI. The CRJ explained that the double payment was immediately detected and the amount was set off
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against future Certificates of Participation/Fit outs. The Commission was concerned by this response, given that there were no documents availed by the CRJ to confirm that indeed the set off was effected as stated. Secondly, the Commission was concerned by this response given that the set off was being done against future certificates for partitioning fit-outs without any indication of the approximate cost of the works. It was alleged that CRJ had authorized payments totaling Kshs169,051,914 to be made on account of the premises said to be on account of rents for January to June 2013, contrary to the terms of the lease agreement and way in excess of the agreed rent. She admitted the allegation and stated that the total sum paid to Sealink Holdings was Ksh.195,147,519.90 -- a sum higher than what was stated in the allegations. The CRJ stated that this sum was inclusive of rent, service charge, security deposit and fit-outs. The Commission observed from the lease agreement that the effective date for payment of rent for Elgon Place premises was April 1, 2013, and not January. However, the Judiciary paid rent to Sealink Holdings for the period of January 2013 to June 2013, and again for the period of July 2013 to September 2013. These payments were clearly outside the terms of the lease agreement and way in excess of the agreed rent. Subsequently, the CRJ caused advance interim payments totaling Ksh177,955,376.85 to be made in four installments on account of the premises for partitioning works, thereby pre-financing the said contractor. The Commission was concerned that the CRJ did not avail the actual contract document signed by the Judiciary and the contractor to confirm the specific terms of the contract. Section 5.1 of Government regulations states clearly
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that Government accounting prohibits prepayments or pre-financing. The CRJ admitted that the partitioning works for the Elgon Place premises was obtained through direct procurement. The Commission observed that on May 23, 2013 the JSC Finance Committee raised queries about the procurement procedure used for partitioning works at ELGON PLACE PREMISES. Similarly, on May 15, 2013, the Finance and Administrative Committee had raised the same queries on procurement. Earlier, on January 23, 2013, the JSC Finance and Administration Committee gave directions to the effect that Management must report to the Committee on the second phase of implementation on Elgon Place premises to ensure prudent utilization of public funds. The Committee had concerns on whether S.29 and 74 of the Public Procurement & Disposal Act 2006 were complied with when the decision to award MS SENTRIM the partitioning works was made. The Chief Registrar denied allegations of leasing ELGON PLACE for the Judiciary without valuations based on the available market rent rates. The documents she presented in her defence were neither dated nor signed and its author was unknown. The Commission could not establish that due diligence was done to ensure that the Judiciary gets value for money. There are two lease documents for the property, each witnessed by a different person who had no legal capacity to witness and bind the Judiciary in an agreement such as a lease. The lease was not signed by any of the directors of the private company offering the premises for leasing, contrary to the law. The documents were also not sealed. The lease terms were amended from six years to 10 years without a proper explanation, and the lease was not registered to safeguard the interests of the Judiciary. No
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evidence was provided to confirm that the documents in question were lodged at the Lands Office for registration as proof that the registration was ongoing. Government Financial Regulations provide that all procurement of goods and services exceeding Ksh50,000 must be through written contract agreement and no payment should be made without a valid contract. Although the CRJ claims that she duly informed the JSC which confirmed the process on January 15, 2013, with regard to leasing Elgon Place, the Commission noted from its records that on January 15, 2013, the JSC Committee appointed a Committee to inquire into complaints against Hon. Mutava J, had a hearing session and the Hansard report shows that there were no deliberations on Elgon Place premises. 2. Pre-financing contractors The CRJ admitted that she paid Ksh58,041,487 to Lekha Trading Company Limited on the strength of a bank guarantee. She pre-financed the company for the supply, delivery, installation and commissioning of EPABX cabling at the Supreme Court even before the works commenced. The Commission interrogated the bank guarantee and noted that it was not duly sealed or witnessed. The CRJ produced a document in an attempt to prove the authenticity and validity of the said bank guarantee. This document is, however, not dated, neither is it signed and the author is unknown. The email attached to the same document is equally not dated and neither does it authenticate the bank guarantee. The Commission observed that Lekha Trading Company according was paid the full contractual sum against a pro-forma invoice contrary to Section 5.4.1
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and 14.7 of the Government Financial Regulations. The payments were clearly not made against any certificate of works. The CRJ admitted that to date, the works have not been handed over to the Judiciary yet the bank guarantee upon which the payment of Ksh58,041,487.00 was made expired on June 25, 2013. That in the event that the Judiciary opts to seek redress, it would be exposed to risk since there is no evidence to show how the contract was to run. CRJ annexed a letter from Equity Bank confirming the authenticity of the bank guarantee, but the guarantee has expired. An internal memo from the Director of ICT shows that the items supplied did not meet contract specifications and the judiciary was supplied refurbished or stolen items. In breach of the law and Government Financial Regulations, the CRJ pre-financed the installation of LAN/WAN services countrywide by causing advance payments of 30 per cent of the total costs to be made to the said providers. She admitted the allegation, which the Commission noted clearly violates the provisions of Section 14.7 and 5.4.1 of the Government Financial Regulations. The law requires that progress payments for contractors be paid against a certificate of works. She admitted authorising an irregular payment of Ksh26,470,332.00 as advance first interim payment on account of proposed prefabricated premises for Bomet, Marimanti, Othaya and Wanguru Courts. The Commission observed that the bank guarantee in respect of this payment was not made available for perusal. The prepayment/pre-financing to JKUAT Enterprises Ltd on account of proposed prefabricated premises for Bomet, Marimanti, Othaya and Wanguru Courts was made contrary to Section 14.7 and 5.4.1 of the Government Financial Regulations. It was noted that special conditions in a contract agreement cannot
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override written law. CRJ admitted authorizing an irregular payment for PREFABRICATED COURT HOUSES in the sum of Ksh82,737,000.00 to JKUAT Enterprises Ltd for interim architectural consultancy without any interim certificate of works being provided. The Commission observed that the CRJs response to the effect that interim payment certificates are normally used while paying contractors and not consultants was not true because JKUAT were supervising consultants and they could only be paid against the certificates submitted by the contractors, this is in line with the provisions of Section 14.7 of Government Financial Regulations. The CRJ did not make available the contract signed with JKUAT Enterprises Ltd for consultancy services to confirm the terms of the agreement. 3. Personal integrity The CRJ denied the allegation that she irregularly received sitting allowances amounting to Ksh2,560,000.00 when the JSC was conducting interviews for Court of Appeal Judges and High Court Judges when she did not participate in the said interviews. The Commission referred to signed register and the verbatim reports for High Court and Court of Appeal interviews for 2012 and 2013, which confirm that the CRJ did not participate in the interviews. The Commission noted that the question of integrity is personal and if there were any erroneous payments made, they ought to have been refunded at the earliest opportunity. Between October 31 and November 21, 2012, the CRJ irregularly caused herself to receive payment totaling eight (8) months salary advance in the total sum of Ksh3,539,250.00 from the Judiciary Milimani Court Deposit fund. The CRJ
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admitted the allegation and stated that the facility was also available to other Judges. She presented a list of the Judges with salary advance which she approved. In her response, the CRJ stated that she had repaid a substantial amount and still continued to make payments. The Commission observed that there was no evidence of such repayment save for a receipt of Ksh680,625.00. The Commission noted that taking salary advances from the Judiciary Fund as opposed to the Consolidated Fund Services, which was the CRJs pay-point, contravened Section 5.8.3 and 5.8.2. of the Government Financial Regulations which state that a salary advance must be obtained within the Vote which bears the cost of the officers salary and in this case CRJs salary point is the Consolidated Fund Services. The Regulations also state that salary advances should not be for more than two months and should only be granted when an officer has no other outstanding advances. Further, advances can only be paid in very exceptional circumstances. The Regulations also state that collateral security is required when the advance exceeds two months. The Commission observed that the circumstances called for the salary advance may not have been exceptional, and that further, the advance was also self-approved. The Commission received no evidence on repayment of the salary advance. Save for the receipt of Ksh680,625.00 CRJ did not repay the salary advances as and when provided in the Government Financial Regulations. The pay slips referred to by CRJ in her response were missing from the documentation presented to the Commission. The Commission noted that salary advance is generally made out of cash available for other services. The overall effect of such advances is to cause liquidity problems in the Judiciary.

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4. Misbehaviour The CRJ admitted the allegation of misbehaviour, which had stated that on August 19, 2013 she addressed the media and publicly referred to the Commissions resolution among others as, irresponsible thereby exhibiting open contempt for the Commission. She stated she had a right to administrative action. The CRJ response confirms the allegation that she prefers to employ temporary and casual staff instead of advising the JSC to employ the necessary staff to support core judicial functions. The CRJ admitted to issuing Government vehicles to junior officers in her office, paying them special perks and giving them titles without the authority of the JSC. The regulations (JSSR) the CRJ alludes to support her actions are not applicable in the Judicial Service. The appointments were made without reference to JSC thus the CRJ action contravene Articles 172(1)(c) and (2), 232 and Part III Third Schedule of the Judicial Service Act, 2011 and the JSC policy of equal opportunity and selection of candidates on merit through fair and open competition from the widest range of eligible candidates.

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