Kenya Insights

Category: Business

  • AfDB Debars CP Power East Africa Limited and Mr. Dawit Wondwossen for 48 Months for Fraudulent Practices

    AfDB Debars CP Power East Africa Limited and Mr. Dawit Wondwossen for 48 Months for Fraudulent Practices

    The African Development Bank Group (AfDB) has banned Kenya-based CP Power East Africa Limited and its part-owner Dawit Wondwossen from its projects after the company was found to have engaged in fraudulent practices in Kenya and Uganda.

    The debarment was announced on Wednesday but is effective from November 4, 2021, and will last for 48 months.

    “An investigation conducted by the Bank’s Office of Integrity and Anti-Corruption established that CP Power East Africa Limited, and Mr Dawit Wondwossen, engaged in fraudulent practices in the context of two separate tenders,” the Pan African financier said in a statement.

    “… namely, a tender for the procurement of plant design, supply and installation of medium voltage networks and last mile-connections under the Uganda Rural Electricity Access Project; and a tender for the procurement of supply and extension of low voltage single phase lines and services cables under the Last Mile Connectivity Project – Phase II in Kenya.”

    Kenya Power’s plan for subsidised connection of homes to the national grid dubbed The Last Mile Project aims at extending the low voltage system throughout the country so that counties with low electricity penetration rates benefit the most.

    The latest phase of the project was expected to connect about 300,000 customers pushing the household with access to electricity to above 1.5 million.

    The debarment renders the company and its affiliates ineligible to participate in AfDB-financed projects during the four-year period.

    The AfDB noted the move qualifies for cross-debarment by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank Group.

    The international financial institutions, which are mostly owned and financed by governments, have been keen to curb corruption in their projects which runs into billions of dollars annually.

    CP Power East Africa adds to the list of Kenyan firms that have been banned by international institutions over unethical practices.

    Nearly 20 Kenya-based companies have been blacklisted by the World Bank and the African Development Bank (AfDB) in less than two years over fraud and quality concerns in projects funded by the multilateral lenders.

  • Okiyah Omtatah Seeks To Stop Fraud Transactions At Stanbic Bank

    Okiyah Omtatah Seeks To Stop Fraud Transactions At Stanbic Bank

    Activist Okiyah Omtatah wants a private account currently being used to transact public funds closed.

    The account at Stanbic Bank is being operated by Intergovernmental Relations Technical Committee (IGRTC).

    “A conservatory order does issue freezing all operations on personal bank account number 0100005155465which the 2nd Respondent’s holds at CFC Stanbic Bank, Kenyatta Avenue Branch, Nairobi pending hearing and determination of the application”, urges Omtatah.

    Omtatah wants an injunction order issued restraining Peter Leley and Monica Wambua from in anyway howsoever transacting any public funds through personal bank account number 0100005155465 which Wambua holds at CFC Stanbic Bank, Kenyatta Avenue Branch, Nairobi.

    He has claimed that Peter Leley, the CEO of the firm, directed funds to an account which is private.

    Funds deposited in the account is not subject to any law or even checks and balances, because it is private.

    He wants orders granted stopping utilization or transfer of the funds until the case is determined.

    He also wants Monica Wambua, who is the organization’s assistant director, found liable for using her private bank account to transact public funds.

    IGTRTC took over the mandate of the Transitional Authority and is tasked to establish a framework for consultation and co-operation between the national and county Governments.

    It is also tasked with identification, verification and transfer of assets of the devolved units.

    “There has been no delay in filing this since the applicant or petitioner has just learnt that on October 19, 2021 or thereabouts, to enable the 1st Interested Party conduct the valuation of public assets, the National Treasury transferred some Sh180 million to the State Department of Devolution, which then transferred the funds to IGRTC but, as the accounting officer, the 1st Respondent (Leley) used his discretion unlawfully to transfer the money to the personal account,” he said in an affidavit.

    He wants the court to freeze the operations of the account, pending the determination of the petition.

    Omtatah also wants the court to direct the Auditor General to conduct a forensic audit all accounts operated by IGRTC, showing the flow of money to and from the said account.

    “It is the petitioner’s case that the decision to use a personal account to handle public funds is both unlawful and unconstitutional and, therefore, invalid,” he said.

    He says there was no public participation in the decision to use the personal account to handle the Committee’s funds and delaying the case might render the petition useless as the funds might be transferred or spent.

    Omtatah further wants the Auditor General ordered to conduct a forensic audit of all IGRTC accounts and file a report in court showing the flow of money from the Intergovernmental Relations Technical Committee to the said personal bank account which Monica Wambua holds at CFC Stanbic Bank, Kenyatta Avenue Branch, Nairobi, and then onto any third parties.

    Omtatah adds that he is apprehensive that the large sums of public funds which have been deposited in the said personal account are exposed since the account is not subject to the checks and balances in law which govern public accounts to safeguard public money.

    “The petitioner has established that the use of the personal account to handle public money is based on a letter Ref: IGR/LGL/10/20/Vol. II, dated December 13, 2019, through which the 1st Respondent informed the Branch Manager, CFC Stanbic Bank, Kenyatta Avenue Branch, that large sums of public funds belonging to the Committee would be channelled through the 2nd Respondent’s personal account held at the branch”, he adds.

    High Court Anti-Corruption Judge Esther Maina certified the matter as urgent and directed it to be heard on January 25 for hearing and further directions.

  • Bank Of Baroda Refute Claims Of Fraud

    Bank Of Baroda Refute Claims Of Fraud

    Bank of Baroda has refuted claims that it’s directors are engaged in fraudulent activities. This follows publications on local blogs that claimed that the directors A Saravanakumar, Ravi Kant Pathak and Rameshchandra Chunilal Meht were allegedly targeting customers who’ve borrowed from the bank and harassing them.

    The blogs claim that the trio nicknamed ‘Three Maharaja Musketeers’ brag they are untouchable as they have the direct blessings of the banks Chairman Dr. Hasmukh Adhia and Shri Sanjiv Chadha, Managing Director & CEO therefore can do as they wish.

    The blogs also claimed that the bank’s management are in bed with corrupt judiciary officials whom they allege are being bribed to make rulings in their favor. A High Court judge has been adversely mentioned in the numerous blogs as having been allegedly bribed to rule in favor of the lender.

    A representative of GlassHouse PR who’re representing Bank of Baroda told Kenya Insights that the claims are untrue. He went further to say the firm was working with Communication Authority to bring down the pages that had exposed the story of the bank’s activity. It is however unclear why they opt to have the pages pulled down instead of addressing the matter or better yet sue for defamation if the claims on the blogs are untrue.

    Some of the tactics that corporates and individuals use to silence criticism and whistleblowing includes DDOS attacks and backdoor censorship using CA because this is Kenya and government institutions are extremely corrupt.

    As Baroda Bank engage PR firms to salvage the situation, it is empirical for the anti-banking fraud unit, EACC, DCI and relevant investigative authorities to look into the claims made to determine if they’re true or false. This is in the best interest in protecting the depositors who’re often the casualties in banks collapse.

    The claims of a judicial officer getting bribed is grave and must not be taken lightly, JSC should take the matter up and do their due diligence as the judge in question has a past history of bribery complaints.

    All this coming at a time when #SonkoLeaks revealed how corrupt the judiciary is with judges openly negotiating and taking bribes for favorable judgments. The justice for sale fraud has seen many suffer and as the corrupt have their way.

    In 2021, KBA and CBK rankings show that the Bank of Baroda offered the cheapest loans in the market.

    Courtesy BD.

    The Competition Authority of Kenya (CAK) also found Baroda Bank to be amongst 12 banks in Kenya with hidden mortgage charges.

    The anti-trust body found that KCB Bank, NCBA Bank, Absa Bank Kenya, DIB Bank Kenya, Mayfair Bank, Consolidated Bank, Victoria Commercial Bank and Bank of Baroda were some of the lenders with unfair mortgage contracts.

    The competition watchdog said the banks had been ordered to review home loan contracts.

    The CAK said the competition law stipulates that a consumer should be informed of all charges and fees payable prior to the same being imposed.

    Banks must also ensure their clients understand all the documents relating to the service they are obtaining.

    “From the reviewed T &Cs, twelve (12) banks were found to be non-compliant with Section 56 of the Act on unconscionable conduct and consequently they were required to revise their T&Cs,” CAK director-general Wang’ombe Kariuki is quoted saying in the 2021 Auditor-General’s report.

    The hidden mortgage costs, including valuation, origination, booking, mortgage and title transfer, commissions, brokers’ fees, legal fees, insurance and stamp duty, can exceed 10 percent over and above the mortgage rate.

    While a typical loan is charged between seven and 15 percent, a home loan also attracts additional legal, insurance and valuation costs that are borne by borrowers, making it costly.

    The rate itself varies during the repayment period, with the Central Bank of Kenya (CBK) indicating 80.2 percent of mortgage loans were on variable interest rates in 2020.

    Once you get the loan, you are charged an application fee, which is usually non-refundable even if the mortgage doesn’t get approved.

    Borrowers may also face onerous penalties whenever they fall on difficult times and struggle to pay their mortgages. The may also be hit with additional legal and auctioneers fees when the home is sold.

    People work hard and their investments must be protected from rogue management. It is from insider dealings, fraud that left thousands of depositors in Chase Bank, Imperial Bank the list is long, to grind their teeth because the red flags were ignored and when the bubble came to burst, it was too late.

  • Embattled Bandari Sacco CEO Brags Of Stopping Investigations Into A Multimillion Theft Scandal

    Embattled Bandari Sacco CEO Brags Of Stopping Investigations Into A Multimillion Theft Scandal

    Last month, detectives from the Directorate of Criminal Investigations (DCI) camped at Mombasa-based Bandari Sacco, to question top officials of the institution over alleged claims of impropriety.

    DCI officers confirmed to Kenya Insights they were investigating claims the officials of the Sacco bought a piece of land, without following the due process.

    A member John Oucho, lodged a petition at the High Court accusing the officials of stealing from the Sacco among other claims of fraudulent activities.

    In a petition, Oucho accuses the officials of using an ongoing construction to pilfer money from the members’ Sacco.

    The ongoing construction of a perimeter wall has invited scrutiny, which has in turn raised questions over the source of the funding.

    Further allegations from human rights bodies allege that the Sacco, did not carry out due diligence before making the purchase of the land that cost it Sh280 million.

    At the DCI officer who requested anonymity said they were unable to get statements from Sacco chairman Chairman Ken Sungu who was ill but they hope to get to him once he recovers.

    Joseph Otieno Bee, Chief Executive Officer of the 17,000-member society earlier told the press that a few disgruntled members are behind the claims he described as malicious.

    However, the Sacco’s Chief CEO was overheard bragging over the Christmas period how he managed to compromise senior DCI officers to kill any investigations into the alleged looting of millions of shillings belonging to its members. He went further bragging of how he had ‘mbuzi choma’ on New Year’s Eve with a top DCI official. According to sources within Bandari Sacco, the alleged cover-up operation involved tens of millions of shillings and was orchestrated, engineered and executed by the Sacco management led by the CEO Joseph Bee and board chairman, Ken Sungu.

    In another development, CEO Mr Joseph Bee is rumoured to be have compiled a fresh list of new board members he says he can comfortably work with; he was overheard complaining that the current chairman is Ken Sungu too rigid and slow at making critical decisions.

    A report on the financial scandals at Bandari Sacco was forwarded to the Directorate of Criminal Investigations (DCI) headquarters on Kiambu road by a section of members of staff for forensic investigations but reports that DCI officers were compromised by the Sacco management cast a shadow of a doubt among the staff who feel that there may never be any meaningful investigations at all.

    Our sources within Bandari said: “Now the CEO is publicly bragging that he managed to reach the top leadership of the DCI to ensure that the status quo remained. Therefore, they are confident that no action can come from that direction.” He said that the estimated is Ksh. 16 million which was pilfered by the Sacco officials to execute their cover-up operation because the matter was already in the hands of the DCI who were to start forensic investigations into the matter.

    The sources said that since no action has come from that office to date, the issue has raised many questions among staff members as to what would happen next since there is clear evidence of massive financial impropriety at the Sacco. There is widespread fear that the operations of the Sacco may grind to a halt if these activities are left to continue, which may easily lead to massive withdrawals by members to salvage their savings from being squandered by the current management.

    It remains unclear how far the DCI investigations have gone into the matter or if they had been initiated at all and if so, how many DCI sleuths had been assigned to deal with it, sources within DCI are only saying “it was an ongoing investigation.”  What remains to be established is if any other government investigative agencies like the Ethics and Anti-Corruption Commission (EACC) are involved.

  • Fuel Sneaked Into The Country By Gulf Energy To Cost Kenyans Dearly

    Fuel Sneaked Into The Country By Gulf Energy To Cost Kenyans Dearly

    Oil marketers are outraged over what they termed illegal importation of 30,000 metric tonnes of petrol by a group of industry players.

    They said the cargo, which was allegedly shipped in during the festive season, may see other marketers run out of stock and lead to higher fuel prices once Sh100 million ($1 million) in additional charges incurred is passed over to Kenyans.

    The oil marketing companies (OMCs) accuse the “elite” group of bypassing a legal requirement that tenders for importation of refined petroleum products must be publicly advertised.

    They allege that the importers quietly shipped in the product as Christmas and New Year festivities kept people busy.

    The ship(MT Jag Prarena) carrying the product is reported to have docked at the port of Mombasa on December 30 and offloaded until Sunday, January 2, while four vessels that had reportedly gone through legal importation process were kept waiting, incurring about Sh100 million in demurrage charges, according to a source.

    In protest letters to Petroleum and Mining Principal Secretary Andrew Kamau, Rubis Energy and Oil Marketers Association of Kenya (Omak) said the private importation was made by Gulf Energy on behalf of a few other marketers.

    Illegal importation

    “We note with great concern the illegal importation of 30,000MT of Gasoline by Gulf Energy Ltd for an “elite” group of oil marketers without the knowledge of all the other OMCs. We wish to further note that the timing for both arrival and discharge of the cargo is not only suspect but was meant to never have been found out due to the festivities. Unfortunately this has been discovered,” says a letter by Omak Chairman Abdi Ali Salaad addressed to PS Kamau.

    The December 31 letter, also copied to Cabinet Secretary John Munyes, Director of Criminal Investigations George Kinoti, Ethics and Anti-Corruption Commission CEO Twalib Mbarak and Energy and Petroleum Regulatory Authority (Epra) Director-General Daniel Kiptoo, said the conduct risked sowing acrimony in the oil industry.

    “We request the relevant government bodies to investigate and make public answers to the following questions: When was the cargo tendered for and, through which medium was it tendered that all our members did not get to know about it, neither got an opportunity to participate in the sharing of the cargo? How was one OMC, Gulf Energy Limited, considered to deliver the cargo without going through the normal tender process? Who are the beneficiaries of the cargo?” the Omak chairman asked.

    The association further complained that a vessel that was supposed to be discharging refined oil at the time was stuck as the one that was privately shipping in offloaded its refined oil.

    They said the demurrage charges accumulated with regard to the delayed vessels would likely be passed over to consumers, adding onto the already high fuel prices.

    “With this recklessness we are left with no choice other than to institute a legal suit against all the concerned parties,” Omak warned.

    The association wants the Petroleum and Mining ministry, Kenya Pipeline Company and Epra to direct that the cargo be shared by all OMCs using the usual ullage formula. They have also called for suspension of the concerned marketers from the open tendering system for importation of oil.

    Four vessels

    “Epra should not allow demurrage related to the next four vessels that have already arrived at the port of Mombasa to be passed over to the Kenyan consumers,” Mr Salaad asked.

    But in a tactical response four days later, on Monday, Rubis Energy – which acquired Gulf Energy in 2019 – also wrote to Mr Kamau with similar complaints.

    In his letter, Rubis CEO Jean-Christian Bergerone also indicated that the “illegal” importation had affected the petroleum industry. He also proposed that the cargo be shared by all the marketers.

    “Discharge of this cargo has pushed forward access of already firmed-up PMS cargoes by five days, which exposes the industry to a PMS stock-out given the already constrained PMS stock position. For equity purposes, therefore, we request that the cargo be shared (by) all OMCs to mitigate an imminent PMS stock-out,” Mr Bergerone said.

    “We confirm that indeed the industry is constrained on PMS and it is, therefore, quite unfortunate that a cargo would be planned for discharge into the common user facility without the knowledge of industry players. Needless to mention the disregard on the impact of delayed product access on already planned cargoes to other OMCs and the compounded demurrage effect on all vessels whose berthing would be delayed,” he added.

    “Importing cargo that favours only a few OMCs is not only suspect but creates disharmony among industry players, unfair competition and exposes Jet A-1 players to excessive demurrage, which is not compensated through the pump by Epra,” he said.

    Since 2020, what used to be Gulf Energy and Kenol Kobil have been trading under the brand of Rubis Energy, following an acquisition that left Rubis controlling 20 per cent of Kenya’s oil market, effectively becoming the largest oil marketer.

    Rubis spent about Sh2.4 billion to rebrand Kenol Kobil and Gulf Energy.

    Mr Bergerone back then indicated that the marketer aimed to have rebranded a total of 250 outlets by this year.

    Omak also noted that the vessel that brought the fuel displaced other ships that should be discharging petroleum products at the Kipevu Oil Terminal. This could result in supply hiccups over the coming weeks.

    At the government-run oil facility, only one tanker can discharge at a time, and whenever vessels are waiting to discharge products, they penalise Kenyans by charging demurrage fees.

    The Kenya Ports Authority is in the final stages of building a Sh40 billion floating terminal that will allow four vessels to discharge at a go, cutting demurrage charges. “The vessel that should be discharging currently is the MT Sloane Square delivering gasoil and is now sitting outside while demurrage is accumulating, who will pay for this demurrage?” poses the association in the letter to PS Petroleum.

    It added that “Epra should not allow demurrage related to the next four vessels that have already arrived at the port of Mombasa be passed to the Kenyan consumers”.

    Sloane Square, which has been waiting to discharge since December 13, is bringing in 86,000 metric tonnes of diesel. Other vessels that are queuing to offload are MT Front Future that has 85,000 metric tonnes of super petrol, MT Alpine Confidence (78,000 metric tonnes of jet fuel) and MT Apostolos II (86,000 metric tonnes of diesel).

    In a report to the National Assembly following a probe into the high cost of fuel in the country, the Finance and National Planning Committee said different vessel owners were paid Sh1.3 billion in demurrage charges between January and August 2021.

    Source.

  • Maersk On The Spot Over Mombasa Port Secret Deal

    Maersk On The Spot Over Mombasa Port Secret Deal

    Global Danish logistics conglomerate Maersk is on the spot following their monopoly in the operations of the Mombasa Port.

    The National Assembly’s Finance, Planning and Trade Committee now wants KPA to come clean on how the private firms operating within its premises were licensed.

    Shrouded in secrecy, the MPs want details on how the firm acquired a lease to the container terminal (berths 13 and 14) at Kenya’s Mombasa Port.

    According to a viral report that has been doing rounds on Kenya’s social media pages, it is alleged that an investigation by an Australian consumer protection body(ACC) found that the company bribed a senior government official, silenced a human rights body through funding and funds MPs from the Coastal region for protection. As of the time of press, Maersk was yet to respond to the allegations of bribery made against them.

    It is alleged that Maersk has been operating at the newly built container terminal 2 (CD2) at the port of Mombasa for the last 3 years for free.

    Ordinarily, if a shipping line is contracted to handle a terminal, they are meant to pay the port operator (KPA) a fee. Usually revenue share is 50:50-shared between shipping line and port operator.

    CD2 is the terminal that solely handles all of government’s imports from military hardware to medicine to fertilizers everything govt imports comes through CD2.

    The total value of business at CD2 every year is about Shs.20 Billion or $200 million. For the last 3 years Maersk has been the shipping line that brings in government cargo and handles it at CD2

    This means that Maersk has 100% monopoly over what the Government of Kenya imports. Whatever government imports from China or Japan or U.S or Spain-Maersk ships it to Kenya.

    The Question then is; why does a foreign shipping line have monopoly over what government  imports?

    President Uhuru is trying to change this by having a Kenyan state owned shipping line take over the govt of Kenya imports. In doing so he has revived Kenya National Shipping Line (KNSL) KNSL was started in 1980s to be Kenya’s official shipping line. KNSL is majority owned by KPA.

    Now-because KNSL has no ships it has partnered with Mediterranean Shipping Company-MSC. MSC is the second largest shipping line globally. The arrangement between KNSL and MSC is structured to have KNSL become the parent company while using MSC assets.

    MSC has access to 550 ports globally. This means KSL now can access 550 ports globally.

    It also means that when KSL takes over CD2, a Kenyan company will be responsible for shipping and handling government cargo. G.o.K will no longer rely on a foreign firm to import its cargo.

    KNSL has committed to pay the port operator 50% of total revenue. Maersk on the other hand pay nothing. Mind you CD2 was built through a loan from JICA. The loan settlement period is 40 years. If KSL takes over and pays the 50% revenue share-KOA will payoff the loan 15 years earlier than the scheduled date.

    Maersk is behind port privatization story.

    Section 16(1) of the Merchant Shipping Act of 2009 says this : “No owner of a ship or person providing the services of a shipping line shall either directly or indirectly provide in the maritime industry crewing services, pilotage ,port facility operator, quay side service provider, terminal operator, general ship contractor…” Put plainly, the law does not allow a shipping line to operate a port. So is Maersk breaking the law in this instance with the monopoly they command?

    A vessel calling report by the Kenya Ports Authority (KPA) indicated that Maersk line topped the list by 35 per cent share of twenty feet equivalent units (teus), surpassing its closest rival, Mediterranean Shipping Company (MSC), by a margin of 19.9 per cent.

    Mistreatment of workers

    Maersk previously came under criticism following claims that their subcontractor Island Marine Service has been mistreating employees in Mombasa- Forcing them to undertake 24-hour shifts with a minimal number of breaks & paying them poorly.

    In November 2018, Danwatch wrote together with Ekstra Bladet about the criticisable working conditions for port workers in Mombasa in Kenya who load and unload Maersk ships. The workers told anonymously about underpayment, extremely long shifts and lack of safety equipment.

    Thomas Kambi who was the whistleblower of the harsh working conditions was fired officially because he is too old and could not deliver – according to himself and his union because he was the initiator for his chess to join Kenya Shipping, Clearing, Freight Logistics & Warehouse Workers Union in fighting for their rights.

    The government on Friday, December 17, impounded a ship carrying radioactive materials in the port of Mombasa.

    Ship carrying Maersk cargo.

    Port officials said the ship had arrived on the Kenyan coast four days earlier on December 13, 2021.

    A statement from the Ministry of Health said it contained highly explosive materials classified as hazardous for public exposure, was detected by radiation detectors installed in the port.

  • Kenyan Firm Locked In Shareholding Row With Ugandan Government

    Kenyan Firm Locked In Shareholding Row With Ugandan Government

    A Kenyan recruitment agency has sued the Ugandan government over the failure to renew his trading licence by demanding that it cede majority shareholding to Ugandans.

    Competitive Manpower International says in a petition filed before the Constitutional Court of Uganda that the new Regulations, which restricts ownership of a recruitment company to Uganda citizens to 51 per cent is illegal.

    The company through its director Moses Adala says the requirement is a violation of Article 21 of the constitution of Uganda as well as the East African Common Market protocol, which Uganda is a founding member and signatory.
    Renewing licence

    He further says the company has failed to get the renewal of the trading licence even after suing the government through the Attorney General and getting an order in 2020.

    Mr Adala says a consent order was signed between the company and the Attorney General last year but the government has failed to renew the company’s licence and later introduced the Employment (Recruitment of Uganda Migrant Workers) regulations in August this year, to undermine the consent order.

    The company says the regulations together with a bank guarantee of Shs100m is a violation of the right to trade and creates a barrier to entry in the business contrary to Article 40 of the Uganda constitution.

    The case comes a few days after Uganda said it will restrict from its domestic market some of Kenya’s raw and processed agricultural products in a reciprocal move that follows Nairobi’s continued ban on some of Kampala’s agricultural products.

    According to Ms Rebecca Kadaga, Ugandan Minister for East African Affairs, the Cabinet has directed the Agriculture ministry to identify and list Kenyan products that will then be banned by the Ugandan government “in a short time.”
    Key agricultural exports to Uganda from Kenya include palm oil, sorghum, vegetables and legumes.

    Kenya and Uganda have for long had trade fights but the latest hostilities between the two East African Community states began brewing in December 2019, when Kenya stopped importing Ugandan milk, particularly the Lato brand.

    The Kenyan company further wants the court to declare regulation 2(2) that requires a fee of $30 per job on the job order to be declared unconstitutional on the grounds that it amounts to extortion because Regulation 26(1) restricts the income charged by the recruitment agency to Shs20,000, the equivalent to one currency point.

    Mr Adala says his company has a number of Ugandan workers who were recruited while the licence was still valid.

  • HF Group, First Community Bank Amongst The 6 Banks Facing Capital And Liquidity Strains

    HF Group, First Community Bank Amongst The 6 Banks Facing Capital And Liquidity Strains

    At least six banks are facing capital and liquidity strains that have forced them to seek the support of the Central Bank of Kenya (CBK) to stay afloat.

    According to the International Monetary Fund (IMF), the five small banks and one mid-sized lender are in breach of capital and liquidity ratios and are being supported by CBK after being shunned by fellow lenders

    “The six banks facing small capital shortfalls will mainly address this by retention of future earnings,” says an IMF staff report on Kenya released last week. “Some small banks have remained dependent on Central Bank liquidity for an extended period, having faced difficulty securing funding in the interbank market.”

     

    The IMF comments are in line with CBK disclosures, which showed the regulator’s liquidity support to struggling banks hit Sh55.47 billion at the end of June 2021, from Sh36.94 billion issued in the previous financial year.

    Even though the IMF does not disclose names, the latest financial results offer clues on the lenders struggling to keep up with the CBK requirements on capital and liquidity levels, as well as insider lending.

    Third-quarter financial results released last month showed HF Group, Spire Bank, Ecobank Kenya, Consolidated Bank, First Community Bank (FCB) and National Bank were all in several breaches.

    The breaches — touching on capital, liquidity and insider lending — have seen some of the lenders including HF, Spire and Consolidated Bank start the search for strategic investors to shore up their capital levels.

    CBK usually reaches out to such lenders to share remedial plans for restoring capital and liquidity levels, in addition to offering them liquidity support. In April 2016, CBK announced the rollout of a facility for commercial and microfinance banks that come under liquidity pressures not borne out of mismanagement.

    “We will avail a facility to any commercial or microfinance bank that comes under liquidity pressures arising from no fault of its own. We will avail this facility for as long as is necessary to return stability and confidence to the Kenyan financial sector,” said CBK.

    Spire Bank is the most affected with negative core capital and in breach of all the capital-related ratios as well as the liquidity ratio.

    The lender’s total capital to total risk-weighted assets ratio — crucial in assessing the strength of a bank’s capital in taking on any losses before becoming insolvent — was at negative 34.61 per cent against the set minimum of 14.5 per cent.

    Spire Bank’s core capital is in a negative position yet insider loans are above Sh43 million. This is in breach of CBK restriction against lending to insiders money that is above the core capital.

    HF Group had by the end of September 2021 breached the core capital to total risk-weighted assets and total capital to total deposits ratios.

    “The aim of the proposed transaction is to strengthen the group’s capital in line with the group’s current strategic direction. This process is ongoing,” the lender said mid last month in relation to its search for a strategic investor.

    Consolidated Bank, which has for the last two years been in search of a strategic investor, saw its core capital drop to Sh504.89 million against the required minimum of Sh1 billion at the end of September 2021.

    FCB’s core capital was at Sh894.75 million at the end of September 2021, which has seen its capital-related ratios drop below the required minimum.

    The lender had also issued insider loans amounting to Sh816.9 million, above the maximum of 100 per cent of core capital that is allowed by the Banking Act. Also in breach of at least one capital ratio are Ecobank and National Bank – a subsidiary of KCB Group.

  • KenGen And Kenya Power Embroiled In Sh25B Payment Dispute

    KenGen And Kenya Power Embroiled In Sh25B Payment Dispute

    Kenya Power and Kengen are embroiled in another dispute after the power distributor rejected a bill from its main power producer, saying it was an overcharge. The power producer says in its annual report it is owed Sh25.141 billion by its main customer, Kenya Power. However, Kenya Power claims that it owes Kengen Sh24.889 billion which leaves Sh241 million unreconciled.

    “This outstanding balance is billed as per power purchase agreements between the two companies. However KPLC confirmed Sh24.889 billion as the amount owing resulting in an unreconciled variance of Sh241 million,” Kengen said in the report.

    Kengen also told the Auditor General that Kenya Power also owes it Sh506 million and $178,000, a matter that the auditor said it could not give a qualified opinion.

    The power producer said it is engaging the Energy ministry and Treasury to help in resolving the issues with Kenya Power which has been undergoing a financial crisis stemming from various sources, including corruption and low demand for electricity in 2020.

    “KenGen continues to engage Kenya Power and both Ministry of Energy and National Treasury to ensure fulfilment of financial obligations and resolution of issues arising from PPAs,” Kengen said.

    It had earlier accused Kenya Power of failing to pay interest accrued on delayed payments of the bills owed to Kengen of upto Sh900 million, a matter Kenya Power said was beyond its control due to the Covid-19 pandemic.

    KenGen currently sells its generated electric energy to a single off taker, Kenya Power. This comes with the attendant risk of late or delayed payment for electricity sales which could have adverse effects on the KenGen’s cash flow and revenues.

    Geothermal drilling
    Meanwhile, the power producer said its revenue from geothermal drilling activities quadrupled in the year to June 2021 thanks to Ethiopia projects. “Earnings from the new Ethiopian operations were up four times Sh440 million last year to Sh1.7 billion in the year ending June 2021, it said in the latest annual report.

    The Ethiopia ventures which include drilling in Tulu Moye in Ethiopia contributed revenues that surpassed the expenses.

    “The diversification venture that include drilling services in Tulu Moye in Ethiopia contributed additional revenue of Shs 1,784 million compared to Shs 440 million in the previous year,” the statement said in part.

    The power producer said the costs associated with the drilling of wells in Tulu Moye were Sh1.3 billion. Ethiopia operations increased the costs of staff, plant operations, and maintenance as well as drilling.

    KenGen, which has for long faced the risk of having one customer, Kenya Power has been keen to diversify to drilling and other ventures to secure its cashflow. “Employee expenses increased by 8.5 per cent to Kes 7.6 billion due costs for staff engaged in the drilling operations in Ethiopia and implementation of Collective Bargaining Agreement (CBA), and gratuity for personnel on contract terms,” KenGen said.

  • Dyer And Blair Investment Bank Under Probe In Sh19M Fraud

    Dyer And Blair Investment Bank Under Probe In Sh19M Fraud

    Dyer and Blair Investment Bank has come under the spotlight following accusations of wash-sale trading scheme.

    This a practice where the investor’s shares are sold without their permission at a lower price after which they’re are bought back at a higher price.

    Kenya Insights has learnt that an investor has petitioned the parliament to intervene accusing the stock broker of selling his shares without his permission in fraud that cost him Sh19M.

    By 2015, the investor Paul Matibo had invested a total of Sh27M in shares and cash at Dyer and Blair from ABC Capital and Kingdom Securities.

    “That him in-spite of him not instructing the bank to make any transactions on his behalf, Ngei was shocked to learn between May and August 2015, the broker had committed his shares in a wash-sale scheme where profitable shares had been sold for low value and repurchased at a higher value,” the petition reads.

    Same company

    The petition adds that without Ngei’s authority, Dyer and Blair sold 22,700 shares in Kenol/Kobil Ltd. at Sh8.80 each on May 28,2015 and repurchased 8,300 shares in the same company at Sh8.80 per share on May 29,2015 then further sold 80,500 shares in the company on the same date at Sh8.60 per share.

    On August 3,2015, Dyer and Blair again without express instructions or authority from Ngei sold 200,000 shares in Equity Bank for Sh37.75 each.

    The broker then on August 6,2015, repurchased 100,000 shares in Equity Bank for Sh40 each and purchased a further 70,300 shares in the said bank for Sh42 each on August 13,2015.

    Petition

    “By engaging in the foregoing reckless, fraudulent, irregular and unregulated trading activities, Dyer and Blair Investment Bank exposed Ngei a colossal loss of Sh19.4M,” said the petition to parliament after Capital Markets Authority (CMA) reportedly failed to take action.

    Ngei says that he enquired from the broker about the unexpected depreciation of his shares at the end of 2015, the bank falsely associated it with devaluation of shares.

    However, contrary to the claims by the bank, Ngei established from the CDSC that Dyer and Blair had fraudulently traded in his shares without his permission.

    Ngei lodged a complaint with the CMA the regulator of capital markets but in spite of the subsequent follow ups made on November 30 2020 and January 2022 to have his complaint addressed, the regulator turned a blind eye in a measure to protect the bank and the matter is yet to be addressed.

    Therefore Ngei is asking the National Assembly through the Departmental Committee on Finance and National Planning to take the matter with a view of to recovering his losses from the broker and also punish CMA for in action.

    The petition was made through Kitui Rural MP David Mboni Mwalika.

    The bank has been faced with similar allegations before in what now appears to be common. Previously, a customer, a Margaret Mukuhi Njuguna alleged fraudulent transfer of Kshs 10,933,510.55 from her account without her knowledge.

    Another instance, the bank’s executive was alleged to have approved a Sh26.2M payment to an impostor who supposedly used forged documents.

    In 2010, a Mr Joseph Kimani, highlighted the fraudulent sale of his shares in KCB and EABL worth a total of over KShs 30,000.

    The Star newspaper reported on a court ruling of a case involving James Mugo, a Dyer & Blair Investment Bank agent in Murang’a who admitted to swindling off Kshs 200,000 from a client, Ms Hellen Wambui.

    In 2016, Dyer and Blair Investment Bank was accused of colluding with CFC Stanbic bank to defraud a client of millions in returns on his investment.

    The High Court termed the incidents that led up to the crime as a complicated wave of deceit perpetuated by the two companies to trade on their client’s money without accounting for interest earned. John Kung’u Kiarie, a former director of Kenya Commercial Bank had invested KSh 100 million with Dyer and Blair who would invest his money in the bond markets among other places. Confident that his money was put to good use, Kiarie went on with his life until he found himself in problems with his then employer in which a criminal case was filed against him.

    In the process of undergoing investigation, the Central Bank of Kenya Fraud Investigation Unit looked into his accounts and discovered that his monies were operational. As if in synchronization, Blair and Dyer offered to freeze Kiarie’s accounts without the fraud investigation unit asking them to back in 2003.

    The CBK unit found that Blair and Dyer as well as CFC Stanbic continued holding on to the money illegally and even used it in trading their businesses without their client knowing. The criminal case against Kiarie ran from 2003 to 2007 when he filed the court case against Mbaru’s firm and the bank. He claimed KSh 465 million as returns on his investment but the court ordered the two defendants to pay Kiarie KSh 300 million plus interest since 2003. In total, the amount added up to KSh 418 million.

    In 2016, Rwandan tobacco tycoon Tribert Ayabatwa Rujugiro filed a multimillion shilling suit against Kenyan investment bank Dyer & Blair, accusing the broker of selling his Safaricom shares and failing to speedily pass on the sale proceeds to him.

    Mr Rujugiro wanted Dyer & Blair ordered to pay him damages for withholding proceeds of the share sale for 135 days, and for paying him after fluctuations of the US dollar rate negatively affected his returns.
    In 2016, Dyer and Blair executive was accused of aiding a Sh100 billion money laundering scheme at one of Kenya’s largest chartered flight operators — Bluebird Aviation. The allegations made in court by a founding shareholder of the Wilson Airport-based carrier have sucked in Mohammed Hassan a former top executive of Dyer & Blair Investment Bank. Mr Hassan, who started off as a finance analyst at Dyer & Blair before rising to become the investment bank’s executive director, was accused of being the conveyor belt linking Bluebird’s accounts to the pockets of Mr Hassan’s partners.
    Mr Hassan was Dyer & Blair’s executive director between 2003 and 2006, and was previously the investment bank’s general manager.
    Yusuf Abdi Adan, the Bluebird Aviation shareholder, has claimed in court that his partners have been using Mr Hassan to fraudulently channel massive funds out of the company as part of a scheme to sideline him and pocket his rightful share of the company’s profits.
    “The three directors have through Dyer & Blair invested massively in both local and international stocks and shares. They have also bought several properties in Nairobi, Coast and Rift Valley. In a single transaction involving NBK, the three directors paid Sh300 million in cash,” the Bluebird co-founder said on the claims that the bank was being used in money laundering.

    Dyer & Blair Chairman and CEO Jimnah Mbaru is one of Kenya’s prominent investment bankers. He led a group of local shareholders in acquiring the entire shareholding of Dyer & Blair from Kenya Commercial Bank (KCB) in 1983.

    Dyer & Blair was founded in 1954 in Nairobi as a partnership of stockbrokers Hickman and Grey. Ownership of the firm changed hands in 1956 to Derek Ingram Dyer & Patrick Murdoch Blair before it was acquired by KCB in 1973.Since Mbaru took over in 1983, the firm has played an instrumental role in some of the biggest deals by publicly listed firms across East Africa. It converted into a fully-fledged licensed investment bank in 2004.

    The firm operates in East Africa through its wholly owned subsidiaries in Kenya, Uganda and Rwanda and is a member of the Nairobi Securities Exchange (NSE), Uganda Securities Exchange (USE) and the Rwanda Stock Exchange (RSE).

  • Petition Seek To Stop Money Laundering Through Betting Firms

    Petition Seek To Stop Money Laundering Through Betting Firms

    Banks are pushing for changes to the law that will compel betting firms to report suspicious deposits and withdrawals from gaming accounts in the latest plan against money laundering.

    Industry lobby Kenya Bankers Association (KBA) said betting sites offer convenient platforms to clean dirty money prompting the push to compel gaming firms to report suspicious bets to the Financial Reporting Centre (FRC).

    KBA petitioned Parliament to amend the Proceeds of Crime and Money Laundering (Amendment) Bill, 2021 and compel industry regulator Betting Control and Licensing Board (BCLB) to monitor suspicious bets and transactions totalling at least Sh1 million ($10,000) and above.

    The push targets punters dealing in large transactions, those putting money in their betting wallets and staking a small fraction of it as well as those making small, regular and suspicious bets.

    Betting firms are not currently required by law to report the suspicious transactions to FRC—which is mandated to track illicit cash— making it a convenient avenue for cleaning dirty cash.

    “Inclusion of Betting Control and Licensing Board (BCLB) since some individuals can use betting as an avenue for money laundering,” the lobby said in its petition.

    The petition is contained in the review of the Proceeds of Crime and Money Laundering (Amendment) Bill, 2021 that is currently before Parliament for debate.

    The committee’s decision on the proposal remains unclear with the Bill set for debate and passage into law before February.

    Chief executive officers of betting firms have in the past said that criminals can feed their illicit money into their betting wallets, bet a small share of the cash before cashing out with vast majority of the cash.

    A number of accounts have been frozen over the past two years as the government steps up the war on money laundering.

    The push comes two years since BCLB made it compulsory for betting firms to report transactions above Sh1 million ($10,000) or suspicious bets to the regulator.

    BCLB included the reporting obligations for betting firms in their annual licences granted from July 2019 amid increased concerns that betting firms are emerging as a vehicle to launder proceeds of crime and corruption.

    The State has since 2019 stepped up the war on betting sites amid the growing concerns that the multi-billion industry is being used to launder money.

    FRC last year opened investigations into SportPesa for possible money laundering in the wake of claims the sports betting firm wired $278 million (Sh30 billion) from its local accounts to offshore banks.

    Other betting firms have been flagged for possible money laundering for sending millions of shilling into the gaming accounts of punters.

    The betting industry has grown over the years to hit a combined revenue base of over Sh200 billion, offering a perfect market for criminals seeking to launder dirty money.

    Betting is in a list of other transactions targeted in the war on money laundering including selling of property; creation, operation and management of companies, management of bank, savings and shares accounts on behalf of clients.

    The Proceeds of Crime and Money Laundering (Amendment) Bill, 2021 also targets to designate advocates, notaries and other independent legal professionals as reporting entities for dirty cash dealings.

    The renewed bid comes ahead of the second assessment of Kenya for compliance with international anti-money laundering rules this year after the first one in 2010 found deficiencies in curbing illicit cash transactions.

  • Heartbreaking: How Equity Bank Took Advantage Of An Agent And Sent Him To Poverty

    Heartbreaking: How Equity Bank Took Advantage Of An Agent And Sent Him To Poverty

    This is a story of an Equity Bank agent who was doing well for the bank at one point making huge profits for the firm. All were merry and he was the darling of the company, the poster boy whose success story ran on banking halls until one day he failed to meet his daily targets and the bank turned  its back on him.

    The man went from hero to zero, his successful business which inspired many in the region, went under. His beautiful family was completely shuttered, from running a business where he could make about Sh200K daily, the withered businessman ran away from home where those he owed were on his tail, he sold family land abs everything to pay off Equity who didn’t back off even after the tits ran dry to vending water for survival.

    The sad story is narrated by a friend and below is the full story.

    Courtesy Tony Murega

    “I just listened to heart shredding story of an equity bank agent (personal friend) completely decapitated (financially) by the bank in most cruel extortionist arrangement never discussed in media.” He posted.

    He continued, ‘The story, as promised. A THREAD My friend had a very successful retail business in Meru. Equity bank recruited him as one of their agents. In no time, he was best agent in Meru county & was invited for a seminar in Thika, to enhance the ‘partnership’. That’s where trouble began’.

    A brief background

    In 2000, he was baking cakes in Meru’s Kooje slums & distributed them in his bicycle. Through sheer hardwork, he transitioned into retail business & relocated. By 2005, he had established a successful retail business. That’s when he hired me as shop assistant.

    I worked for him for 7 months as I waited to join university. He was a shrewd & diligent businessman. A committed Christian. During my stay, we made sales of ksh100k/day. Business was good. By 2009, he was making ksh200K/day in sales. Banks courted him for loans. He was reluctant.

    When equity bank rolled out agency banking, he was a prime candidate. He was recruited. It was time to diversify & grow. In no time, he was the banks best agent in Meru county & was feted by the bank. He was a constant feature at bank halls, opening accounts & registering equitel.

    It’s on this basis that he was selected for a seminar/ training on enhanced partnership. At the seminar, they’re offered a facility through which they could access short-term float to offer seamless services. They would borrow & repay same day at zero interest. No contract signed.

    Back to business, he went full throttle. He borrowed between ksh200k -ksh500k daily & repaid the same day without a hitch. Everything was good. Equity bank called often, made videos of his business & ran it in its banking halls. His calls were on priority list.

    Then came the rude shock day. He had borrowed ksh200k on that day. By end of day, he had ~ ksh170k in float. He made frantic calls to fellow agents to buy additional float. They’d none. Frustrated, he went to bed & decided to make settlement the following morning. Shock awaited!

    In the morning, as usual, he logged & checked his account balance. He almost fainted. The bank had charged him ksh18K daily for the facility. For entire 3 months. That totalled >ksh1M in interest for money he had repaid same day & was sold as zero interest facility. He cried

    He rushed to the bank manager & sought audience. The mood had changed. The manager said bank position on facility had changed. He had to pay. For a week, he walked into every office, made calls, he was no longer welcome. His videos were pulled down, threats followed.

    He ran out of options & decided to start payments. Further shock awaited. Every time he deposited for a customer, bank would deduct ksh18K & CR customer with the rest. Customers would go mad. He would need additional float by using business cash for withdrawal. Business dipped.

    Same thing with withdraw. If customer made ksh30k withdraw, bank would take ksh18K float leaving him with ksh12. Meanwhile customer would take ksh30K in cash. His business could no longer sustain this assault. Bank was relentless. He hid his vehicle, sold plot to repay.

    Still, he had to borrow more money to top up customer deposits, pay equity & clear older debts. Meanwhile, interest kept growing & equity grew deaf. He was arrested on complaint of creditors X2. His rent went into arrears for a year & shop went empty. With nowhere to turn he self-exiled.

    At last, a random friend helped clear equity balance. Pacified, the bank relented. They never picked their gadgets. Meanwhile the shop closed doors 7 months ago. Rent in arrears over one year & soaking in debts. The family can’t pay fees for children, can’t buy food

    From exile in neighboring county, my friend hawks water & fruits to pay off debts. Nothing left for family. The wife struggles with kids & rely on well-wishers.

    This is a street narrative picked & shared at impulse. In September 2020, while preparing for my wedding, I visited my friend & former employer to invite him. I noticed that his shop was conspicuously empty. I told my fiancée, I sensed something was terribly wrong.

     

    The couple was very guarded on what they were going through but admitted they were facing financial challenges origination from their equity agency business. Maybe they didn’t want to mess our wedding plans with depressing details. We agreed to talk after wedding. We didn’t.

    In May this year, he reached out. His daughter was joining college & he had nothing to get her admitted. I was very disturbing. But this wasn’t time for questions. We organised for a small fund mobilisation. She went to college.

    Few days ago, the wife reached out. She was requesting for ksh1000 for her younger daughter’s shopping. I became very worried & requested for a meeting. That meeting was yesterday (14th Dec 2021). I rode my bike from Nanyuki, got in Meru by nightfall. We sat down until 12.15 am today (15th Dec 2021).

    She tearfully narrated. I listened. My eyes wet. Voice lost. I asked few questions for clarity. My mind got numb & unresponsive. She saw me off at the gate at 12.35am & said goodnight. He story made me so physically vulnerable that I requested she wishes me safe journey instead.

    Four Kilometre down the road, (to my parents place) a car suddenly came to life behind me. I grew apprehensive, took a diversion on a rough road. I knew my Yamaha DT was king here. Two corners & lights shore behind me. They were tailing me. Survival mode activated, I accelerated & lost them

    I got home 15 minutes later. Switched the lights on. There was none. I eased into the chair. Tried making a draft but phone went off. It was 2.30am. I wondered:

    1. Why would equity charge ksh18K for a facility repaid same day?

    2. Why change position midway & apply retroactively?

    3. Why not negotiate settlement instead of this financial atrocity.

    4. Why risk customer deposits yet they knew their agent was insolvent?

    5. Why take/ intercept customer money to settle their debts?

    6. Where is Central Bank of Kenya (CBK) in all this arrangement?

    This is not an isolated case, despite being a top bank in Kenya, Equity has been a hub of complaints with many gullible customers losing big chunks of money to schemes internally and beyond.

  • ‘M-Pesa Is Not Safe’ Presidential Candidate Warns After Losing Money

    ‘M-Pesa Is Not Safe’ Presidential Candidate Warns After Losing Money

    Presidential candidate Reuben Kigame is unhappy following his long battle for transparency against Safaricom after losing money in a scandalous way. Below is his narration courtesy of his Facebook page.

    SAFARICOM MPESA IS NOT SAFE! YOU CAN LOSE YOUR MONEY WITHOUT TRACE!

    By Reuben Kigame

    “I wish I never had to go public with this! I wish everyone, including Safaricom, would believe that my coming out to warn on this is inevitable. It’s not good for someone to divulge details about their personal life at this level, but I feel this is necessary. So, read, tell Safaricom and be warned. Here we go. Be patient and follow to the end:

    Let me preempt an important question many of you may be asking. Am I able to use a phone and transact on MPesa as someone with visual challenge by myself? The answer is “Yes.” Now that we have this out of the way, read carefully:

    Shortly after Midnight, the morning of 18th November, 2021, at 12:33 A.M. my colleague sends me 10,000 shillings for my flight to Nairobi because of an urgent meeting that had come up. In the morning at 6:43 A.M. I sent kshs6,800 to Jambo Jet for my ticket. My MPesa balance read kshs3442.95. My team drove me to Eldoret International Airport where I was handed over to the Airport security for the scanning of my bags and escort to check-in. The routine procedure was smooth and fast. I handed in my luggage, customarily removing my laptop and putting it on the tray together with my phone, belt and watch. I was quickly helped onto the other side of the scanner and handed my items including my phone. Because I was getting late for the flight, everything was done pretty fast. … I was escorted to board and I left for Nairobi.

    At JKIA I was received by the ground crew and security and handed over to my team which was waiting at the VIP parking. We drove off and proceeded to the venue of the meeting. Along the way, my Assistant says it is important for us to stop and fuel. I told him we were in a hurry and that I did not have enough money for the day’s events but that I could use my MPesa to put a little fuel to save us on time. We pulled into a gas station and I told him to fuel. Because it was not our favourite petrol station, we agreed we can put in kshs1000 and then fuel later. When I sent the money to the Till number provided, I was greeted by a big shock: The message read “failed. There You do not have enough money in your MPesa account to pay ksh1000.00 to Total South C.” and that my MPesa balance was141.95 shillings.

    The mystery was a transaction that took place at exactly 7:11 the same morning, while I was checking in at the airport in Eldoret. The transaction read:

    Pki7suusdd confirmed. Ksh3,230.00 sent to Mike Isalamba 0769142199 on 18/11/21 at 7:11 AM. New MPesa balance is Ksh141.95. Transaction cost, Ksh51.00. …

    WHO MOVED MONEY FROM MY PHONE TO MIKE ISALAMBA, someone I do not know? Someone I have not interacted with? Someone not at the airport, following investigations? Who is he? Who accessed a phone that was in my custody all the while? Since I was being helped by Security, I needed to check in. Once we boarded, I put my phone off, as is required. Before you think I am joking, I have consulted and followed up with the Airport Security at Eldoret International Airport and they have reviewed the CCTV footage carefully and confirm they can see me and all my movements including the check-in and also confirm that they do not see me or anybody using my phone at the time the incident happened.

    So why do I put everything at Safaricom’s desk and warn you about MPesa safety?

    When I got the message that I did not have enough money on my phone and saw the mystery transaction, I immediately called Safaricom Customer Care. They told me they had received the info and had escalated the matter to their anti-fraud department and that Safaricom would get back to me within 48 hours. They did not and so, about 10:00 A.M. on Saturday, 20th November, 2021, I called again and this time I was told Safaricom would get back to me within two hours. They did not. On Monday, 22nd November, 2021, I called in the morning to find out the progress. I was told by the Customer Care that the Issue was still pending and that someone would call me by end of day. Nobody did. I called the Eldoret Safaricom shop and reported the case on the same day and they told me they were following it. Two days later, on the afternoon of 24th November, I called again and I was advised just to be patient and that the Issue was still being looked into. I asked why all the previous promises had failed and told I just needed to be patient. The next day, 25th November, I felt it necessary to report the incident to the police and so I filed the case at Naiberi station in Eldoret. I escalated the information to the Airport Police Station and decided to wait.

    Well, I decided to call one more time this afternoon before going public. I was told to wait on the line. I did. The next thing I noticed, the Safaricom automated service was asking me to rate the service I had received, whether I was served well, and, all, at the scale of 1-10 whether I would recommend Safaricom to someone else.

    Well, you can imagine how I graded Safaricom!.. am I a patient person? Maybe not!

    Meanwhile, my call to Mike Isalamba received the usual, “cannot be reached … we have notified him…” and my text inquiring about the same to him also goes unresponded to. I contacted him just a couple of days ago, having taken this long to give Safaricom the maximum time to help me.

    Nearly one month after the incident, a digital company cannot tell me how someone knew exactly how much I had left on my MPesa to be able to withdraw the maximum amount. They cannot tell me who Mike Isalamba is. They have not refunded my money and the inconvenience and embarrassment caused. They cannot explain why the matter could not be resolved in 48 hours. Nobody has talked to me.

    Conclusion: You can lose money on the Safaricom MPesa App without trace for nearly a month or more. Do I say this because I hate Safaricom? No. Do I have anything against the company? No. Is my money lost under their watching eye? Yes. Do you have a reason to fear? Yes.”

    Sounds like a good case for litigation against Safaricom. It is the only way the company can be held accountable for its actions. Any financial system thrives on trust and Safaricom should know that without such it cannot succeed. Regulators including CBK and CA should be seized of this matter and act expeditiously to restore consumer confidence. The overreliance on MPesa by the country should also be re-examined.

  • Court Allows Dusit Complex Auctioning

    Court Allows Dusit Complex Auctioning

    The sale of a contested property in Nairobi will proceed after high court issued the greenlight.

    High Court Judge Alfred Mabeya allowed Synergy Industrial Credit to auction a complex also claimed by I & M Bank, which had sought to stop the process.

    “In the view of the foregoing, i am satisfied that the applicant has made a strong case for the grant of leave sought. Accordingly, i find the application dated October 22,2021 to be merited and the same is hereby allowed. The applicant is granted leave in terms of prayers (2) and (3)of the application. It is so ordered”, ruled Judge Mabeya.

    Justice Mabeya said the charge placed by the lender was a ploy by Cape Holdings to enable it evade its legal obligations.

    This is after Synergy filed application seeking orders to be allowed to proceed with execution against cape holding ltd.

    Synergy, has been in court since 2010 arguing that Cape Holdings, which owns the building, has been unable to settle a Sh5 billion debt.

    I & M Bank wanted the auction stopped because it is also owed money by the same firm.

    The dispute between the parties emanate from the sale of L.R No. 209/19436 (I.R 120877) “the suit property”.

    The dispute arose when Synergy paid Sh750 million to acquire part of the apartments but the deal fell through and the matter was referred to an arbitrator.

    The debt has since ballooned to Sh4.5 billion plus interest. The Judge said in a ruling that it was not necessary for Synergy, through senior Counsel Ahmednasir Abdullahi, to seek the administrator’s consent to auction the property.

    Court added that Synergy had placed a caveat through a court order in 2011, warning over the property. “With such a caveat, that property was not free to be given as a security,” he said.

    The dispute revolved around a transaction where Synergy bought two of the blocks out of 14 which were under construction and paid Ksh750 million upfront. When the property was completed, Cape Holdings refused to transfer the property and the matter was referred to arbitration.In 2015, the arbitrator, Ochieng Oduol ordered the developer to refund the principal amount and interest totaling Sh1.66 billion.

    Cape Holdings then moved to the High Court and convinced the court to quash the award, saying it was erroneous.

    Synergy then moved to the Court of Appeal and the award was restored while attempts by Cape Holdings to move to the Supreme Court and reverse the decision was dismissed by the apex court.

    In a ruling delivered on October 8, the Supreme Court held that it will not interfere with the judgment of the Court of appeal that upheld the award on grounds of jurisdiction.

  • Nyama Mama Directors Charged With Sh520M Fraud

    Nyama Mama Directors Charged With Sh520M Fraud

    The director of popular food joint Nyama Mama has beencharged with obtaining a Sh520 million loan using fraudulent security.

    Jayesh Shanghavi is the director of Good Earth Ltd alongside his wife Ninaa Shanghavi who was absent in court and a warrant of arrest was issued against her.

    Principal magistrate Wandia Nyamu last Friday issued the warrant of arrest after the prosecution made an application before court.

    Good Earth Ltd is the company behind Nyama Mama, Blue Door, Yao and Deli and Bakery.

    It is alleged that on diverse dates between December 10, 2018 and November 2020 in Nairobi with intent to defraud, jointly with others not before court, they induced Victoria Commercial Bank Limited to execute a first legal charge over apartment Number B2.

    The apartment is erected on land in Nairobi, namely Crystal Edge Apartment, to secure the amount of Sh520 million as a valuable security.

    Police records said that the couple, who are directors of Good Earth Group, entered into an agreement with Victoria Bank and began borrowing since 2015 and continued to acquire more loans from the bank up until November 2020.

    Victoria Commercial Bank said that the two obtained loans from them in 2018/2019 but deliberately prevented perfection of security.

    According to court documents, the duo got a colossal amount from the financial institution on the premises that “the collateral to be issued was being processed and would be registered accordingly”.

    It claims that even after the facilities were extended to the business, the security was never perfected in spite of numerous promises to do so and was never presented to the bank as anticipated for registration.

    Through lawyers Edwin Saluny and Eric Kaburu, Shanghavi told court that he is a Tanzanian who operates his businesses in Kenya.

    He pleaded for lenient bond terms, saying the accused will adhere to all conditions set by the court and will appear in court whenever he is needed to.

    Magistrate Nyamu released him on bail, saying she had considered that the accused is presumed innocent until proven guilty.

    She ordered him to deposit  of Sh400,000 cash bail or an alternative bond of Sh1 million.

    The case will be mentioned on December 8.

  • Teachers Hospital Visits Not Limited, Minet Clarifies

    Teachers Hospital Visits Not Limited, Minet Clarifies

    There should be no limitation in the number of times a teacher accesses medical care in approved medical facilities, insurance firm managing the scheme has affirmed.

    Minet Kenya chief executive Sammy Muthui said some service providers had misinterpreted the seven-day rule to frustrate teachers and then accuse the insurer of mishandling them.

    “We like the truth and own up when there are problems and try to solve them. Under the seven-day rule, there is no limitation to treatment… There is no limit on the number of visits but providers, because they are motivated to make more money, misinterpret the rule and then distress our teachers,” he said at a media workshop.

    Out of pocket

    Minet Kenya, Muthui said, had started taking disciplinary action against service providers who misinterpret the rule.

    He said if a member returns to the hospital within seven days for the same condition, the agreement states that the member should be attended to and the visit should not be charged to the members’ account.

    This means the teacher should never be asked to pay out of pocket. “It is rogue service providers who want to charge capitation more times than they are allowed,” said Muthui.

    “The seven-day rule should be for that incident that was treated. Even when someone is paying in cash, if you go for dressing, you do not get charged for consultation every time. We have not seen a situation where a dependent is locked out because of the seven-day rule and if there are such cases it should not happen.”

    Muthui said that in the capitation agreement between the payer and the service provider, the latter is required to provide quality services to all teachers without warranting a return to hospital for primary healthcare unless for a different diagnosis or a complication.

    “Please note that there are no daily limits for outpatient services. Based on the capitation agreement with the service providers, the service provider is required to provide all the services required as per the diagnosis and the mode of treatment.”

    Minet Kenya was contracted by Teachers Service Commission (TSC) to manage teachers’ medical scheme since 2015.

    To reach out to more teachers, Muthui said, they have been increasing the number of providers, including government hospitals, so that remote areas can be served well.

    He said the insurer is in talks with Council of Governors to allow the insurer to accredit all government hospitals though the challenge at hand is that most do no have the administrative capability to do all the online transactions needed.

    Medical allowance

    “There are cases of inadequate service providers in some areas and we have to work with what is on the ground but that does not mean we can just work with everyone. Sometimes we even blacklist some providers and have about 20 cases for service providers across the country,” he said.

    Currently, Minet Kenya works with 34 public facilities which have been added to the service providers’ panel.

    In all, there are 577 outpatient, 367 inpatient, 338 maternity, 95 optical and 154 dental service providers in all 47 counties.

    Teachers previously earned a monthly medical allowance, which ranged from Sh954 to Sh4,412.

    However, there was a policy shift to grant teachers a medical scheme to improve their welfare.

    Owing to constraints in budgetary provisions, TSC settled for a hybrid insurance model namely capitation financing model and fully insured component.

    “This scheme continues to cushion 341,760 teachers and 1.7 million households against the Covid-19 pandemic,” says the TSC.

  • No Alarm Over Idle Projects, KenGen Reacts To Auditor General’s Queries

    No Alarm Over Idle Projects, KenGen Reacts To Auditor General’s Queries

    Electricity generating company KenGen has defended its stock of idle assets which were highlighted in an audit of its books for the year ended June by the Office of the Auditor General (OAG).

    In response to the disclosures, KenGen says idle geothermal wells valued at Ksh.79.3 billion are to be incorporated into future power generation projects.

    “Energy projects, especially geothermal infrastructure, require significant lead time during which geothermal steam resources must be harnessed and availed to guide plant specifications and conclusion of financing agreements and terms,” the company said on Thursday.

    Examples include 83MW Olkaria I unit 6 to be commissioned by end of the year, 140MW Olkaria VI project, 50MW Olkaria I Rehabilitation among others. “These are a long-term investment that will go a long way in making Kenya green and also reduce the overall cost of power in the long run. On the case of the hydro plaza, the project has since been completed and officially handed over to the company and is now fully occupied.” KenGen says.

    On transmission lines, KenGen says that notably Sondu and Olkaria the respective loans are currently being paid by the transmission company and negotiations for transfer of both the underlying loans and lines are at advanced stages.

    KenGen says it has dug an estimated 319 geothermal wells which have been subsequently assigned to current and future projects.

    In her audit of Kengen books, Auditor General Nancy Gathungu noted the vacant geothermal wells offer no value for money even as KenGen services a loan taken from the Export-Import Bank of China (EXIM) for the investment.

    The idle geothermal wells were flagged alongside other projects whose value rounds off to Ksh.99.3 billion and which the audit fingers as likely incomplete projects.

    The projects include Ksh.4.5 billion deployed in the construction of Soundu and Olkaria transmission lines which are currently used by a third party for revenue generation.

    According to the audit report, KenGen did not provide explanations to auditors on why the projects had not been completed and capitalized.

    KenGen financial statements through 12 months to June 30, 2021, earned a qualified opinion after the company failed to revalue its power, plant and equipment for depreciation, a matter the electricity generating company blamed on COVID-19 related disruptions.

    The lack of inclusion for the depreciated assets which are factored in the calculation of net earnings means KenGen real earnings in the period are much lower than the reported net profit of Ksh.1.3 billion for the period.

  • Nairobi West Hospital Expand Wings With Helipad Launch For Rapid Evacuation And Transfer

    Nairobi West Hospital Expand Wings With Helipad Launch For Rapid Evacuation And Transfer

    The Nairobi West Hospital has today unveiled a 24-hour customized helipad to bolster medical emergency services that target a growing local and international demand.

    The facility, a first of its kind Kenya, will boost the hospital’s ability to respond to medical emergencies by facilitating air evacuations in the country and across the East Africa region.

    Nairobi West Hospital chief medical officer, Dr. Andrew Gachie, said the lifesaving resource will speed up access to medical services especially for critically ill patients.

    “Each minute will now henceforth make a huge difference in our patient’s lives. The new helipad will speed up the time incurred transferring critically ill patients to the Hospital, giving them the very best chance of survival,” Dr.  Gachie said.

    The facility will also cure the challenge of navigating traffic that has been a major headache in medical emergency evacuation especially for ground ambulances that normally waste hours of crucial time according to Dr Gachie.

    “We are now moving away from the ground to a more efficient air medical emergency evacuation regime,” Dr Gachie added.

    The 50.5 meters-high helipad that is perched atop its 17 story- modern medical facility is designed to give patients quick access to crucial care in cases involving trauma, critical care, surgery, high-risk birthing and premature new-born critical care.

    The Helipad has been designed and built to Joint Commission International standards with a capacity to hold up to eight tonnes.

    A trauma bay has been developed below the helipad to handle critical events during the emergency evacuations.

    Founded in 1980, the Hospital has expanded into a center offering general and specialized services to clients both locally and from the East African region.

    The helipad will be a shot in the arm for the hospital forays into medical tourism bouyed by its solid reputation in the fields of cancer management, Accident & Emergency and transplants.

    “We now have the right modern medical facilities that can offer a record 2-5 minutes treatment of critical illnesses. We are changing management of cancer in the country and across the region,” Dr Gachie said.  

    Through partnerships with Turkish and Indian firms, the hospital intends to offer packages of cancer treatments including bone marrow transplant.

    The hospital has a state of the art laboratories, 78-bed ICU facility and six operational theatres that will see the start of organ transplant over the next two months.

    Dr. Gachie noted the latest development will be a great addition to the hospital’s infrastructural developments.

  • Fly 748 Increases Mombasa And Ukunda Flights Ahead Of Holiday Peak

    Fly 748 Increases Mombasa And Ukunda Flights Ahead Of Holiday Peak

    Aviation firm 748 Air Services has today announced changes in its flight schedules as part of plans to strengthen its presence in key domestic routes as the peak season approaches.

    From December 1, 2021, the airline will increase its flight frequency to the coastal tourism circuit and adjust departure and arrival times to Mombasa and Ukunda.

    “With the curfew being lifted and more people gettingvaccinated, we have seen an increase of people travelling for leisure to the coast. As a result, we have decided to increase flights to these routes,” said 748 Air Services Managing Director, Moses Mwangi.

    The carrier has introduced a third midday frequency to Mombasa, making it three daily flights to the destination.

    Consequently, departure and arrival times for flights in this route have changed. The first flight from JKIA will now depart from 9.00 AM and arrive at Moi International Airport by 10.00 Am.

    The midday flight will depart from JKIA at 1.00p.m and return from Moi International Airport at 3.00 p.m.

    The evening flight to Mombasa will leave at 5.00 p.m and depart from Moi International Airport at 7.00 p.m.

    For Ukunda route, a morning frequency has been introduced for travellers with the flight departing from JKIA at 8.30 am.

    “To meet demand during peak tourism season and ensure our customers continue to seamlessly get the best service with no delays, we have added 2 Dash 8-Q400s to our fleet,” said 748 Air Services Chairman, Ahmed Jibril.

    The newly acquired 2 Bombardier Dash 8 – Q400 aircraft will cater to the anticipated surge in customer numbers on these routes over the coming festive season.

    Daily flights to Kisumu have been reduced to one afternoon frequency.

  • KRA Axes 20 Clearing And Forwarding Firms Engaging In Counterfeit Goods And Tax Evasion

    KRA Axes 20 Clearing And Forwarding Firms Engaging In Counterfeit Goods And Tax Evasion

    The Kenya Revenue Authority (KRA) has flagged the operations of 20 clearing and forwarding agents based at the Port of Mombasa, setting them up for tighter scrutiny as it moves in to net tax cheats.

    KRA deputy commissioner for Revenue J Kaguru says in a letter dated November 11 that the firms were found to have ‘non-compliance issues’ after several risk analyses.

    The clearing and forwarding agents include Regal Freighters, Delta Express, Subukia Holdings, Greentop Logistics, Zanaa Freights, Riam Logistics as well as Utmost Freight Matters Limited.

    Others are Ozone Freight Forwarders Limited, Adelcus Agencies, Wiljones Logistics, Venues Kenya Limited and Neline Shipping and Logistics Enterprises.

    “The attached list of 20 clearing agents have been found to have compliance issues, after several risk analysis. All consignments declared by the clearing agents in the list to be considered as high risk,” said Mr Kaguru in the letter. KRA red lists entities that it finds to have higher tax risks.

    The taxman further stated that going forward, and from the date of the issuance of the memo all kitenge and textile materials must be verified 100 percent, all photos taken and attached in the system.

    The taxman, currently racing to bring more people into the tax bracket and curb tax cheating in the quest to meet targets, says that to enhance compliance, long room pass will be issued upon review by HDO officers on duty.

    All cargo release at station level must also be approved online by the station managers.

    Station managers must also be enjoined and given online approval before release of the consignments.

    “The purpose of this communication therefore, is to request Document Process Centers, National Targeting Centers and the release stations to make appropriate arrangements to comply,” he says.

    According to the KRA’s communication, the black listed firms have been engaged in the importation of counterfeit, poor quality goods prompting the crackdown.

    African wax print fabric commonly known as ‘Kitenge’ will now undergo 100 percent verification in stringent measures by the taxman aimed at subjecting importers to tighter checks in a race to seal tax leakages.

    The Kenya Revenue Authority (KRA) says in a memo dated November 11 that the checks would ascertain the description, quality and quantity of the fabric to allow for proper valuation.

    “Going forward, from the date of this memo, it is now expected that clearance of Kitenge and textile materials to be verified 100 percent and photos to be taken and attached in the system,” says the KRA in the memo.

    The development is set to delay the clearance of the fabric, which is gaining traction in the region. Importers have been using arbitrary values when declaring Kitenge at the port of entry, which appears to disregard the quality of the fabric.

    Some importers have also been using generic description — “textile materials” — or falsely declaring their goods as mixed fabrics to avoid paying the requisite duty for full container loads of Kitenge.

    But to seal the loopholes, KRA says all imported consignments described as “textile materials” should also be subjected to physical verification before releasing at the places of discharge.

    Such consignments, the taxman says, should be excluded from the “Port Clearance Model”, which allows release without physical verification.

    “To avert the release of the many pending consignments of Kitenge or textile materials, without proper verification, about 60 containerised cargo will now be subjected to close monitoring before entry,” says the KRA.

    The taxman is subjecting Kitenge and other textile materials to tighter checks barely a day after it flagged the operations of 20 clearing and forwarding agents based at the Mombasa port.

    The firms were found to have “non-compliance issues” after several risk analyses.

    The KRA has been intensifying its crackdown on tax cheats using various databases, including bank statements, import records, Kenya Power records, motor vehicle registration details, water bills and data from the Kenya Civil Aviation Authority, which reveals individuals who own assets such as aircraft.

    The taxman has in the past two years also been seeking details of suppliers and contractors hired by county governments.

    This followed a steep increase in imports of the luxury goods and multi-million-shilling investments in real estate — an indication that some crooks could be evading payment of tax.

    Last week, KRA commissioner-general Githii Mburu said his officers are now spending time on social media, trolling Kenyans posting photos of luxury cars, throwing expensive parties, living lavishly to ensure their taxes are in tandem with their image.

    The taxman wants socialites and individuals who display lavish lifestyles on the interwebs to pay their fair share of taxes as it races to bring more people into the tax bracket.