Supreme Court Upholds Government’s Legal Acquisition of SGR

In a landmark ruling, the Supreme Court of Kenya has declared that the government’s acquisition of the Standard Gauge Railway (SGR) was legally carried out. The five-judge bench, led by Deputy Chief Justice Philomena Mwilu, unanimously concluded that the procurement process for the SGR project, which involved a government-to-government contract with China, met the requirements of the Constitution and the Public Procurement Disposal Act. The court dismissed the Court of Appeal’s previous verdict, which criticized the lack of public participation in the project.

The judges emphasized that the government’s adherence to the laid-out procedure, rather than individual satisfaction or agreement, was crucial. They noted that the involvement of China Road and Bridge Corporation (CRBC) as the contractor was a foregone conclusion, and the subsequent financing arrangements did not dictate the procurement process. The court also rejected the contract submitted by Busia Senator Okiya Omtatah as evidence.

The Court of Appeal had previously found that Kenya Railways (KR) violated procurement laws by directly hiring CRBC without subjecting the project to competitive bidding. However, the Supreme Court ruled that the engagement of CRBC as the contractor was established before the financing agreement and was not dependent on it. They determined that KR failed to comply with constitutional requirements and procurement regulations.

The SGR project comprises three phases with estimated costs of Sh327 billion, Sh150 billion, and Sh380 billion, respectively. Atanas Maina, former Managing Director of Kenya Railways, stated that hiring CRBC was a condition set in the financing agreement between Kenya and China. The Court of Appeal disputed this claim, stating that the engagement of CRBC as the contractor was not mandated by the financing agreement but was procured beforehand.

The Attorney General argued that the government-to-government loan agreement exempted the SGR project from standard procurement regulations. The Court of Appeal agreed, stating that the procurement procedure was predetermined. However, claims of bypassing parliament and neglecting environmental impact assessments were dismissed.

Omtatah and the Law Society of Kenya (LSK) contended that the project was overpriced and lacked proper feasibility studies. They also alleged a conflict of interest in the government awarding the contract to CRBC, which had conducted the feasibility study for free. The LSK further claimed that the government did not follow proper procurement procedures.

The Supreme Court’s ruling settles the long-standing dispute over the legality of the SGR acquisition, confirming the government’s actions were within the bounds of the law.