Investigations Sought Into Alleged Fraud and Financial Irregularities in KPC IPO Transaction

A formal complaint has been submitted to several investigative, oversight and accountability agencies seeking investigations into alleged fraud, unlawful expenditure of public funds and other integrity concerns surrounding the Kenya Pipeline Company (KPC) initial public offering (IPO) transaction.

The letter, authored by advocate Kennedy Oduor Wanyanga on behalf of his client, Kelvin Omondi, has been copied to the Ethics and Anti-Corruption Commission (EACC), Directorate of Criminal Investigations (DCI), Commission on Administrative Justice, Law Society of Kenya, Assets Recovery Agency, Parliamentary Accounts Committee and other relevant offices.

The advocate has requested that the agencies examine allegations contained in documents, correspondence, bank statements and communications reportedly in his client's possession. The complaint also calls for prosecution of any individuals found culpable and recovery of public funds or assets allegedly acquired through proceeds of wrongdoing.

The allegations have not been independently verified, and no finding of liability or criminal wrongdoing has been established against the individuals or institutions named in the complaint.

Questions Raised Over Privatization Authority Appointment

The complaint questions the circumstances surrounding the appointment of Dr Janerose Omondi as Acting Chief Executive Officer of the Privatization Authority in June 2025.

According to the letter, the appointment and its subsequent extension raise concerns under Chapter Six of the Constitution, which addresses leadership and integrity, as well as applicable public sector governance requirements.

The advocate has asked the relevant authorities to examine the circumstances of the appointment and determine whether the applicable legal and governance procedures were followed.

Alleged Irregularities in Procurement of Advisory Services

The complaint further raises concerns over the procurement of transaction advisory and share-registry services for the KPC IPO.

It alleges that changes were made to the terms of reference after their initial publication and that the amendments may have disadvantaged some bidders or favoured a predetermined bidder.

The letter calls for an examination of the procurement process, including the composition and conduct of tender evaluation committees.

It also alleges the solicitation of money from transaction advisers and possible inflation of transaction-advisory costs. Investigators have been asked to review financial records and communications associated with the procurement to establish whether the claims are substantiated.

Ksh.200 Million to Ksh.350 Million Advisory Budget Increase

Another key issue raised in the complaint concerns an alleged increase in the budget for KPC IPO transaction-advisory services from Ksh.200 million to Ksh.350 million.

The advocate questions whether the increase received the approvals required under the Public Finance Management Act, procurement law and the applicable framework governing the IPO.

The complaint asks investigators to establish the circumstances surrounding the alleged adjustment, identify the authorising parties and determine whether the expenditure complied with legal requirements.

Faida Investment Bank Contract and Fee Structure Examined

The letter also challenges aspects of the contract awarded to Faida Investment Bank, raising questions over the tax treatment reflected in the tender documents compared with the terms ultimately included in the contract.

According to the complaint, the advisory arrangement included a one per cent success fee and a 1.5 per cent placement fee.

The advocate estimates that the fees and related taxes, based on the stated IPO proceeds, could amount to approximately Ksh.2.918 billion.

The complaint calls for a review of the contract, fee calculations and tax treatment to determine whether the arrangements complied with the applicable legal and procurement requirements.

Disputed Ksh.12.848 Billion in Alleged Unpaid Bids

The complaint further alleges that approximately Ksh.12.848 billion in bids attributed to the lead transaction adviser had not been honoured by the relevant payment deadline.

The advocate wants investigators to establish whether shares linked to the allegedly unpaid bids were nevertheless accepted, allotted or credited to investors' Central Depository and Settlement Corporation (CDSC) accounts.

The complaint estimates that the disputed amount could have implications for placement and success fees and alleges a potential loss exceeding Ksh.321 million.

It calls for scrutiny of underlying bid records, payment records, investment bank guarantees (IBGs), CDSC accounts and bank statements to establish whether the allegations are supported by evidence.

Questions Over Publicly Reported IPO Subscription Figures

The letter also raises questions regarding the subscription rate publicly communicated during the KPC IPO.

The complainant argues that a distinction may exist between bids initially recorded and bids ultimately funded and settled.

The advocate has therefore asked authorities to determine whether the publicly reported subscription figures accurately reflected genuine and ultimately funded demand.

The issue forms part of the broader request for verification of the transaction's financial records and reporting processes.

Documents Submitted to Support Complaint

The complaint is accompanied by several documents that the advocate says support the allegations, including:

1. Correspondence involving Image Registrars and the Privatization Authority.
2. The consultancy agreement between Faida Investment Bank and Rock Advisors.
3. A business valuation report.
4. Bank statements.
5. The lead transaction-adviser contract.
6. WhatsApp messages and email communications.

The documents are intended to assist investigators in examining the procurement, financial and contractual aspects of the IPO transaction.

Agencies Asked to Investigate and Pursue Recovery

The advocate has requested that the relevant agencies conduct joint or independent investigations into the allegations.

The complaint seeks to establish whether public funds were unlawfully paid or lost, identify individuals or entities that may have benefited and pursue the recovery of any funds or assets found to have been obtained unlawfully.

The requested investigations would determine whether the allegations have a factual and legal basis and whether any administrative, civil or criminal action is warranted.

The complaint remains an allegation-based request for investigation. Any findings, prosecutions or recovery proceedings would depend on the outcome of inquiries by the relevant authorities.