All is not well at Kenya Pipeline Company(KPC). Already top managers at KPC want disciplinary action taken against Kisumu pipeline deport manager John Chege.
Chege is accused of refusing to obey orders and undermining principal secretary petroleum Andrew Kamau.
Also targeted is Hudson Andambi who has been acting MD.
Andambi and Chege are accused of refusing to load fuel onto Kenya Railway wagon to have been flagged off to port Bel in Uganda by president Uhuru Kenyatta.
Mutea decision to advise Chege not to comply with the order on grounds that the destination and consigned was suspicious has also landed him in hot soup.
KPA MD succession battle intensifies – Weekly Citizen
The abrupt resignation of Daniel Manduku as Kenya Ports Authority managing director has opened a succession battle at the port of Mombasa.
Rashid Salim, the GM engineering services has since been appointed acting managing director. Transport cabinet secretary James Macharia said Salim will act pending the advertisement and competitive recruitment of a substantive managing director.
It has emerged that Salim was picked due to his long working experience at the port. He has been at the port for a record 38 years. He was appointed as general manager after serving as head of marine engineering at the agency. A section of port stakeholders and employees want him confirmed as MD, saying as an insider with long experience, he is the best suited person to bring efficiency at KPA.
But even as Salim settles on the otherwise hot seat, Weekly Citizen understands that he is not the favourite of Mombasa port cartels. He is considered ‘a passing cloud’. It is claimed Vincent Sidai, the port’s GM Infrastructure is being pushed by some government officials in the Transport ministry to be the next MD.
Sidai was a gubernatorial aspirant in Busia county in the last general elections. It is said, the forces who wanted him become governor are the same ones vigorously campaigning for his elevation to apparently take care of their interests ahead of the next general elections.
The GM for Lamu Port Abdulahi Samata is another figure being fronted to succeed Manduku. He is among top managers who were controversially transferred from the port of Mombasa before Manduku’s appointment. Other than Samata, Sudi Mwasinago is another GM who was moved to Kisumu port in unclear circumstances. It is not clear, if Mwasinago will apply for the MD’s post when advertised.
But another camp operating behind the scenes with connections at State House is pushing for the little known Kilifi county secretary Arnold Mkare to be appointed next port MD. Surprisingly, this camp is so confident that it has already told Mkare to prepare himself for the next assignment at the port.
It is claimed, an influential person within the military is among those who want Mkare to succeed Manduku. And if Mkare were to be appointed, both the chairman and MD of port will be from the same region of Kilifi County. Two former KPA MDs namely Catherine Mturi and James Mulewa were also from Kilifi county.
Meanwhile, several senior Kenya Ports Authority managers risks being suspended over several tender malpractices in the parastatal.
An audit and risk report dated March 18, shows that senior managers in, procurement and finance were involved in malpractices which has cost KPA billions of shillings in lost revenue and outright theft.
The KPA board is mulling over the action to take with fears that some top managers are well connected politically and suspending them could backfire on them.
Nevertheless, the KPA board says it is concerned about the issues since they amounted to circumventing set processes and the public procurement and disposal Act 2015. The port’s general manager, finance Patrick Nyoike who is on the spotlight of EACC has since been asked by the board to explain why budget locks are not implemented in the port’s SAP accounting system to avoid the loss of funds.
The board’s report also shows that KPA’s internal audit department had carried out an audit of the draft financial statements for the period ended December 2019, and found that the agency had overrun its budget by Sh2.3 billion, spending Sh21billion instead of the planned Sh19billion.
The audit has also revealed a growing number of debtors, with the authority’s trade cargo debtors owing Sh4billion as at the end of last year, compared with Sh3.6 billion in the first quarter ending September last year, representing an 11.28pc increase.
This in essence could mean, some corrupt officials could be colluding with outsiders to make the authority offer more services without getting paid. At the same time, the finance department has been put on the spot for advance payment of Sh60 million to suppliers, contrary to the terms of the contract.
The money was paid to three travel agents, Kilindini Travel Centre, Regal Tours and Travel, and Helinas Safaris without any approval, and the provision was not covered in the contract terms. The board wants disciplinary action taken against the staff who circumvented the process. It is claimed, officials collude with the agents to arrange for them private air services at the expense of the authority. The audit revealed that Zara Travels did not bid to provide air travel, yet it was engaged to offer the services.
Tender No KPA/159/2015-16 for the Provision of Air Travel Agency Services had 14 bidders, four of which were awarded as per Memo No 121-005/2015-16. Zara was not among the firms. The port’s acting procurement manager Aza Dzengo is being blamed for the procurement scams.
The report covers the deliberations and resolutions of the 57th Board Audit and Risk Committee meeting held on March 5 and 8 2020 5 at the KPA’s Boardroom, Kipevu.
Members present were Delilah Ngala – committee chairperson, Mary Ngari, Peter Murachia, Beatrice Nyamoita – alternate director (state department of Transport), Festus Kingori – alternate director (National Treasury), Oscar Eredi representing Attorney General, Paul Bor representing general manager, operations, Rashid Salim general manager, Lilian Mwangi – head of internal audit and risk management (secretary) and Samuel Ngumi – principal risk management office.
An audit report revealed ills at the KPA ports where over Sh200 billion was lost in tenders and called for disciplinary action against top managers. Many say, the report had the blessing of powerful forces at the ministry to haunt Manduku out.
The report which covers the deliberations and resolutions of the 57th board audit and risk committee meeting held on the 5 and 8 2020 at KPA’s boardroom, Kipevu was the catalyst that forced then KPA Manduku to resign.
According to the latest report, the repairs and maintenance at the port had a budget overrun of about Sh1.5 billion in the first quarter of 2019/2020.
The budgeted amount for repairs and maintenance for July 2019 – December 2019 was Sh380 million but the actual expenditure incurred totaled Sh3.7 billion which represents an adverse variance of Sh3.3 billion.
The report says between July 2018 and December 2019, Sh12.9 billion was spent on repairs of which Sh8.6 billion was not in the procurement plan.
It adds that between July 2019 and December 2019, 117 LPOs were issued under repair and maintenance but Sh4.247 billion could not be traced in the Authority’s Procurement plan.
A total of Sh2.431 billion has since been paid against the LPOs.
The report says KPA contracted 11 firms to supply 17,940 concrete barriers where 13 LPOs with 1,380 barriers each were issued.
The concrete barriers were procured at a cost of Sh1.22 billion at Sh68,267 per unit but notes that the splitting of works implies the works was of low value hence avoiding open tendering.
It notes that several contracts for provision of various services were extended after the lapse of expiry periods which led to award of construction work or supply of goods to the same firms for an extended period without fresh competitive bidding.
The report says there was a disconnect between funds available at the time orders were placed and when payments were made.
According to the report, the management told the committee the ICT department was carrying out system configuration to allow partial payment of invoices but the challenges included shifting the responsibility of identifying the invoices to be paid/not paid.
It notes that Kwatos Vendor (TSB) is developing the requisite changes that will be a solution to the invoices problem as the first development was rolled out in February 2020.
On a debt to a firm, Zynmat Energy, the Committee was informed that the legal division took up the matter and a notice of forfeiture was published in newspapers in December 2019.
There were cases of customers with outstanding debts whose credit limits were not being adhered to but the finance department has reviewed credit limits and some customers have enhanced their guarantee in line with the current business model.
According to the report, by June 2019, cash clients had accumulated debts to a tune of Sh265 million.
The finance department cited the causes behind the uncollected bills as uncollected cargo.
The head of civil engineering had been directed to respond to the budget overruns by September 2019. The budget overrun was Sh644.7 million.
The responses indicated the reasons for the overrun were because of civil engineering department being called upon to undertake works that had not been planned; enhancing capacity of ICD Nairobi; Development of Makongeni yard; presidential visit to Liwatoni to Commission Kenya Coast Guard Services; Development of Kisumu Port and manufacture of concrete barriers for traffic control at a cost of Sh1.1 billion as it had not been planned for.
The report noted three double payments, two reversals and two instances the same vendor invoice number were used to pay running LPOs.
Regarding Enterprise Risk Management, the committee was informed that KPA’s Corporate Risk Register was developed in 2017 and adopted by the Board in April 2018.
The head of internal audit informed the committee that plans were under way to review the corporate risks to ensure they are in line with the strategic objectives in the strategic plan 2018-2022.
It noted that issue of missing logbooks should be pursued through conventional cargo engineering.
The meeting heard that the reconciliation was ongoing by the SGR unit in ICDN but the increase in debtors was as a result of customer disputes on weight band for 40FT containers which had been resolved by KRC issuing a clarification.
The report noted that the inventory balance as at December 2019 was Sh617.126 million, provision for obsolete inventory was Sh35.446 million hence the resultant Net Inventory balance of Sh581.680 million.
It noted that about 45pc of inventory valued at Sh275 million had not been utilised for a period ranging between two years to seven years.
On trade cargo debtors, it noted that debtors totalled to Sh4.013 billion at December 2019 as compared to Sh3.606 billion in the first quarter ending September 2019, representing 11.28pc increase.
The customers’ outstanding balance stood at Sh2.136 billion while Sh1.459 billion was collected in January reducing the outstanding balances to Sh2.119 billion.
The growth in debts was attributed to growth in business.
The outstanding marine debtors was Sh512 million of which Sh474 million is owed from 15 companies but Sh81 million was collected in January 2020 resulting in a balance of Sh393 million.
The report noted that some sub-ledgers for Equity Bank accounts had unreconcilled net balances of Sh28.7 million.
It says the 2nd terminal suppliers had 11 debit entries totaling Sh4.2b and five credit entries totaling Sh2.6 billion dating back 2016 with no corresponding entries.
On Lamu Port Project, a total of 18 debit entries totaling Sh7.5b credit 7 entries totaling Sh3.2b backdated to between 2014 and 2018 with no corresponding entries.
The report says there were inconsistencies in charging depreciation as assets capitalised on the same date had some of them charged depreciation while others were not.
The management responded all the identified assets were capitalised/reclassified on September 2019 and depreciation start date set as September 1 2019.
The report says advance creditors balance as December 2019 amounted to Sh1.5b which includes payments relating to services for which invoices have not been received.
The committee heard that unclaimed staff amounts above Sh1, 000 will be credited to the respective staff bank accounts, whereas for the lower amounts, an email will be sent to the affected staff to collect their allowances within three months.
The Head of Internal Audit also presented Terms of Reference for engagement of a consultant to undertake a forensic exercise.
The preliminary quotes from big four professional services firms had an average cost of Sh81 million inclusive of subcontracting costs for specialised services.
The report noted that the ICT department lacked a disaster recovery team with members that are tasked to orchestrate all matters relating to an actual or potential disaster.
But the management assured that the ICT department was in the process of developing detailed disaster recovery plan.
On advance payment of Sh60 million to supplier’s contrary to the contract terms, it noted that three travel agents namely; Kilindini Travel Centre, Regal Tours and travel and Helinas Safaris were paid without any approval.
It noted that a tender for the Provision of Air Travel Agency Services had fourteen bidders out of which four firms were awarded.
It was noted that Zara Travels did not bid in the tendering process yet were engaged to offer the services.
The report notes the supply of staff uniform contract expired since 2014 and there was no renewed/valid enforceable contract to date.
The report notes that Sh7.4 million relating to Staff Uniform dating back to June 2018 were partly delivered while other remain undelivered beyond the agreed delivery timelines.
It notes that the tender for Biennial Contract for Building Works – Reserved for Disadvantaged Group was signed in April 2015 for a period of two years up to April 2017. The contract was extended for more than two years from the date of expiry.
Consequently, a fresh tender was floated to replace the previous one but was annulled by PPRA due to expiry of the tender validity and to date the old contract is in use.
On the supply of portable water, two LPOs amounting Sh205.2 million were paid without receipt of delivery notes.
It notes that though the price charge per metric ton was not to exceed Mombasa Water Services rates, currently, the price for the supply of water is 125% above the current price charge by MOWASCO.
Dynasties using KRA to hit business rivals – Weekly Citizen
Even as the government intensifies the war on corruption, there are claims that dynasties that have ruled the country’s economic and political pillars are unleashing salvos at the Kenya Revenue Authority to cripple firms belonging to upcoming investors who they view as a threat to their political dominance.
The claim was first made by controversial billionaire businessman Humphrey Kariuki who accused members of the Kenyatta family of sending government law enforcement agencies to harass him.
Kariuki specifically pointed an accusing finger at Muhoho Kenyatta, president Uhuru Kenyatta’s younger and powerful brother, whom he accused of developing an obsession with his business deals.
Before the ink could dry, the proprietor of Keroche Industries, Tabitha Karanja, claimed that powerful figures in government on her rival, Kenya Breweries payroll, were all intent on crippling her business.
But according to highly placed sources, Keroche Industries is on the government radar after a local bank injected capital worth Sh5 billion to finance its expansion. Keroche has been able to service the bank loan and was to get another facility hence the current war with KRA.
The funds infused into Keroche led to an undercover tax investigation by KRA that resulted in the arrest and prosecution of the brewer’s owners, Tabitha and her husband Joseph Karanja last year. This year, KRA moved and froze the firm’s bank accounts before the High Court came to its rescue.
According to KRA, Keroche did not make full disclosure of funds it received from Barclays Bank and unnamed donors who reportedly pumped Sh5 billion to expand its Naivasha plant.
There are claims of company ownership is being restructured with new board members.
Keroche directors, Tabitha and her husband, needed cash to modernize their Naivasha factory so as to boost production and effectively compete with the giant East African Breweries.
In 2010, it was reported in a section of media that Keroche was seeking partnerships and external investors to inject extra cash to cushion it against the effects of a hurried expansion process.
Later in 2014, deputy president William Ruto and Tabitha were publicly seen during the launch of the Keroche Foundation at the Laico Regency. The move was not received well by a section of power barons.
Tabitha and Karanja were to be later arraigned in court to answer to up to 10 charges related to tax evasion.
They were released by Milimani Chief Magistrate Francis Andayi on cash bail of Sh10 million and Sh2 million respectively.
They were accused of fraud by posting incorrect statements on excise duty by reducing the company’s tax liability thereby denying the exchequer Sh14.5 billion over a period of four years.
Founded in 1997 and wholly owned by the Karanja family, Keroche started by making spirits and wines before diversifying into beer in 2009.
It was the first-ever Kenyan-owned company to brew beer which for a long time was the preserve of East African Breweries Limited.
Keroche has long promised that it plans to raise further capital for investment through an IPO on the Nairobi Securities Exchange, but so far no effort has been made towards this direction.
But other sources opine that the Karanjas are victims of a multinational company out to kill competition.
The sources add that the dynasties have frustrated efforts to form the Tax Appeals Tribunal which was enacted into law through the Tax Appeal Act 2013 which came into effect in April 2015.
The tribunal is borne out of the realisation that taxation is a global problem and that in order to support businesses to support economy, there is need to create a judicial body to arbitrate on taxes and the decisions of KRA before they end up at the High Court.
The members of the Tax Appeals Tribunal were appointed in 2015 and their term ended in April 2018.
Since then, the appointing authority (then cabinet minister Henry Rotich) refused to do so, resulting in failure to have a tax arbiter.
In the absence of a constituted Tax Appeals Tribunal as stipulated in the country’s laws, the designs of dynasties move quickly because there is no arbitration.
They add that Tabitha is being persecuted because she dared to be a billionaire without initiation by the dynasties.
Also, most of the dynasties own shares in EABL and she was therefore eating into their profits through her popular brands.
For Kariuki, according to sources, his desire to set up a milk processing factory set him in a collision course with the dynasties.
Speaking at a private get together at one of his palatial residences in Nairobi, Kariuki claimed Muhoho had developed cold feet over his rapidly rising billionaire status among the Kikuyus and was jealous of his Forbes African ranking.
Kariuki – who has never shown any interest in politics – feels his growing financial clout is being deemed as a serious threat to the dominance of Kenyatta family not only over the Kikuyu elite but also in Kenya’s and the regions business circles.
The reclusive Kariuki is one of the regions’ most influential and powerful business leaders and it is hard to overstate his stature in African business circles.
He is owner of international oil product distributing firm Dalbit Petroleum and has multinational interests in energy, manufacturing, retail, food and beverage, tourism and hospitality, oil and gas industries.
Kariuki is known as proprietor of a huge 105MW independent power production plant, the multi-billion Hub mall in Karen, Mt Kenya Safari Club and Africa Spirits Ltd.
But other sources dismissed the narrative of the dynasties versus hustlers, saying it was coined by the deputy president William Ruto to further his political interests.
Masinde Muliro varsity new acting VC disapproved – Weekly Citizen
A section of staff at Masinde Muliro University of Science and Technology is opposed and have dismissed a move by Education cabinet secretary George Magoha to appoint Solomon Shibairo to act for six months as the university’s vice chancellor.
Apart from challenging Magoha to reach at a compromise and have cases filed in court withdrawn as it happened at University of Nairobi where Julia Ojiambo is the chair of the council, they dismissed Shibairo as an outsider whose current duties are wanting.
Shibairo is the deputy vice chancellor in charge of Academic and Student Affairs at Kibabii University. Those who have worked under him say that he cannot manage an institution of the magnitude of Mmust.
There has been concern Mmust current situation of having acting VCs is distabilising the institution academically and rendering its worthiness as a leading institution in the region. The interviews were held to fill the position sometimes back. Then PS Corretta Suda is said to have blocked the appointment and it was part of the reason she was removed from her portfolio. Morris Amutabi had emerged the winner during the interviews. Prof Amutabi served DVC Kisii University and vice chancellor Lukenya University.
Shibairo is third acting VC named within 18 months. In December 2018, then Education CS Amina Mohammed, named Joseph Bosire as acting VC. Bosire was the DVC Academic Affairs at Jaramogi Oginga Odinga University in Siaya. He acted for six months and his contract was not extended.
Bosire was replaced in July 2019 by Asenath Sigot as acting VC, courtesy of Magoha, for six months. Sigot tenure was extended for another three months. Two cases are pending at the Labour and Relations Court challenging the process of appointing substantive office holders by the Public Service Commission.
The university has a new council chaired by Jane Mutua. Other members are Stephen Mutoro, Gathu Kiragu, Connie Mogaka and Peter Ogango.They will serve for three years with effect from March 10 2020.
Kenya University Staff Union Mmust chapter chairman Onzere Mulingo is questioning the acting VC syndrome management style at Mmust, claiming it not effective to steer the education of higher learning to its expectations
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