Kenya Insights

Category: Business

  • Inside NMS’ ambitious plan to digitize chaotic Matatu Industry

    Inside NMS’ ambitious plan to digitize chaotic Matatu Industry

    Nairobi Metropolitan Services (NMS) is planning to introduce a digital queuing system and install smart cameras in termini in Nairobi to end the madness that has become the face of transport industry.

    The  Major General Mohammed Badi led agency is also planning to establish police posts  within the termini to ensure enforcement of the regulations  and to boost security too. Nairobi termini are common with pickpockets and thugs who pose as touts but terrorize commuters but ameras will help the security team to digitally monitoring whatever goes on within and around the termini.

    “The police officers in the bus termini police posts’ will be charged with enforcement to restore law and order across the city,” said Badi.

    To bring sanity to the matatu industry, NMS believes that digital queuing system will control the flow of public service vehicles (PSVs) in and out of the termini.

    The NMS director further added that the smart cameras will be linked to operation centres at police headquarters and NMS to monitor every action in the bus termini and officers will also be designated at the centres to keep an eye.

    NMS Director Major General Mohammed Badi [p/courtesy]
    “The officers at the operational centre will be able to see the buses coming and will arrange how they come and drop passengers by automatically putting it in the queuing system. That helps in ensuring PSVs are disciplined in terms of picking and dropping passengers leading to law and order in the termini,” said Badi.

    Badi will require Saccos to nominate representative to sit in the operations room to monitor misbehaving members. He also directed Transport and Public Works Engineer Michael Ochieng’ to ensure that no touting will be allowed in the modern termini.

    The plan that aims to reduce crime rate through a round clock surveillance will also restore order as drivers will queue according to their saccos and follow directions from screens mounted at the termini.

    NMS is currently constructing six bus termini including  Muthurwa, Park Road, Fig Tree, Green Park, Desai and another one at the junction of Bunyala and Workshop Road and a firm has already been contracted to roll out the plan.

     

  • State Wins Against Jacob Juma’s Sh200B Case

    State Wins Against Jacob Juma’s Sh200B Case

    Kenya has for the second time won a Sh200 billion case against Cortec Mining Kenya Limited and Stirling Capital Limited over revocation of their licence in 2013.

    The two wanted the International Centre for Settlement of Investment Disputes (ICSID) to overturn a 2018 tribunal decision, which found the license was a protected investment.

    The firms had been granted licence to mine niobium and rare earth minerals at Mrima Hills in Kwale County but it was later cancelled by the government, forcing Cortec to challenge the revocation.

    In 2018, the investor-state arbitral tribunal dismissed the case and ordered the companies to pay costs of around $3.5 million to the government, compared with the $6.5 million it was seeking.

    Initial drilling at the Mrima Hill project had suggested more than 100 million tonnes of niobium and 30 million tonnes of rare earth minerals, the ruling said.

    The ICSID upheld the decision saying the companies failed to prove that the ruling will have negative consequences on the mining sector.

    “For the foregoing reasons the committee unanimously decided that the application for annulment of the Award of 22 October 2018 rendered in Cortec Mining Kenya Limited, Cortec (Pty) Limited and Stirling Capital Limited VS Republic OF Kenya is dismissed,” said ICSID in a ruling delivered on March 19.

    The two firms had appealed against the award saying was inconsistent with the terms of a 2013 agreement between UK and Kenya for the promotion and protection of investments, and that it was rendered in disregard of key evidence they presented before the tribunal.

    Kenya on its part argued that there was nothing to overturn and the case was an attempt to appeal against the findings of the tribunal, issued in 2018.

    Mineral Rights Board—which advices the government on granting mineral rights—reckons Kenya now has possession of the world fifth largest rare earth mines.

    Search for new firms

    Mr Stephen Kuria, the chair of the board, said that the State will consider seeking other firms to mine the minerals.

    “This are decisions that the State is not going to arrive at soon. We need to do a valuation and quantify the value of minerals we have on ground,” he said yesterday.

    Niobium is a component in high-strength steels and rare earths are a group of 17 elements used in consumer electronics and magnets for electric vehicle motors. Cortec is associated with the slain businessman Jacob Juma who was the local’s shareholder.

    (BD)

  • Family Bank Officially Joins The United Nations Global Compact Network

    Family Bank Officially Joins The United Nations Global Compact Network

    Nairobi, Kenya, 23rd March 2021 – Family Bank has today officially joined the United Nations Global Compact network underscoring its commitment to undertaking sustainable and responsible business to advance inclusive development. Family becomes the 4th bank to commit to building a sustainable business in Kenya.

    “It gives us great pleasure to join the United Nations Global Compact network after a rigorous vetting procedure. This membership reaffirms our commitment to building a sustainable business and we believe that by joining this Network, Family Bank will advance corporate sustainability in Kenya. For long-term business growth and positive social impact, Family Bank will benchmark against global practices and access technical guidance and thought leadership from the United Nations Global Compact network,” said Family Bank CEO Rebecca Mbithi.

    This membership is in line with the Bank’s 2020 – 2024 Strategic Plan, dubbed ‘take-off’ that is aligned to 13 of the 17 United Nations Sustainable Development Goals (SDG) and the United Nations Environment Programme (UNEP) Finance Initiativeon Responsible Banking and Sustainable Financing aimed at delivering value and creation of a sustainable future for all.

    “We pride ourselves in empowering families, the core unit of any society, through sustainable social investment programmes that resonate with our customers. Currently, these Shared Value Initiatives focus on youth via education through High School scholarships and mentorship programmes, inclusive education for children with special needs, nurturingsports talent, agribusiness, construction, Information & Communications Technology (ICT), water, sanitation and hygiene (WASH) as well as environmental conservation for climate changeadaptation. The Bank has set aside KES 300M to advance these initiatives through the Family Group Foundation,” said Family Bank CEO Rebecca Mbithi.

    Family Bank joins more than 12,000 member companies in over 160 countries that are aligning their operations and strategies to universal principles on human rights, labour, environment and anti-corruption. This membership will facilitate the Family Bank to take strategic action towards broader societal goals using a principle-based approach to significantly contribute to the attainment of the global Sustainable Development Goals (SDGs) by 2030.

    “We want to officially welcome Family Bank, the 4thbank in Kenya to make a public commitment to adhere to the Ten Principles of human rights, labour, environment and anti-corruption, to the UN Global Compact network. This is a true testament that the Bank’s leadership is taking the necessary steps to advance sustainability, not just in the Kenyan market, but regionally and globally,” said UN Global Compact Kenya Network Executive Director Judy Njino.

    “We are ready to work with Family Bank and promote its competitiveness within the global space and provide the necessary frameworks and best practices on how to internalise the principles of sustainable business within their strategies and operations,” she added.

    Founded in 2000 as a special initiative of the UN Secretary-General, the United Nations Global Compact is a call for private sector companies everywhere to align their operations and strategies with the Ten Principles in the areas of human rights, labour, environment and anti-corruption. All participating companies are required to publicly submit an annual Communication on Progress (COP) report that details their respective organization’s activities on the implementation ofthese Principles to support the achievement of the global SDGs.

  • Kenya Airways Made Sh36.5B Loss In 2020

    Kenya Airways Made Sh36.5B Loss In 2020

    Kenya Airways on Tuesday said its pretax loss for last year tripled to 36.57 billion shillings ($333.2 million) as the coronavirus crisis hit demand for travel.

    The carrier, which is part owned by Air France KLM, said its revenue plunged by more than half during the period, as lockdown measures reduced passengers.

    Cargo volumes also went down during the period, as the carrier grounded some flights, leading to reduced belly space.

    The airline’s basic loss per share jumped to 6.22 shillings in 2020 from 2.23 shillings in the prior year, it said.

    ($1 = 109.7500 Kenyan shillings)

  • Coulson Harney LLP Advocates Locked In Sales Row With Le Mac Towers Owners

    Coulson Harney LLP Advocates Locked In Sales Row With Le Mac Towers Owners

    Owners of an exclusive 24 storey apartment in Westlands, Le Mac towers, are locked in a court fight with top law firm over proceeds from the sale of homes in the Sh4 billion property with glass walkway 126 metre-high.

    In its court papers, Mark Properties Ltd wants the law firm, Coulson Harney LLP Advocates, be compelled to pay a sum of Sh136.9 million it received from purchasers of units in the building.

    It reckons that the law firm was obligated to surrender all funds received for the registration of the leases after their relationship broke down.

    But the law firm has denied that they received the quoted money, arguing they received Sh93.5 million and settled with Mark Properties Ltd.

    The property has offices on six floors and residential apartments on 14 floors. The 23rd floor will have a spa and a business centre.

    Also available on the building’s 24th floor is a rooftop swimming pool, gym, and children’s play area.

    In a letter of engagement dated September 13, 2012 the property firm mandated Coulson Harney LLP Advocates to provide legal services in relation to the sale of units on the suit property.

    However, in the course of their engagement, the parties disagreed and in August 2020, the advocates terminated the relationship and ceased to act for the company.

    In its court papers, Mark Properties Ltd says that in terminating retainer, the advocates abandoned the conveyances that had been paid for and that it was incumbent upon the law firm to surrender the company’s legal fees and the deposits on stamp duty to the company to enable it complete the process of registration of the leases.

    The company moved to court demanding a refund and seeking to stop the advocates from, in any way, dealing with monies paid by the purchasers of the units on the suit property on account of stamp duty, vendor legal costs, government and agents fees on transfer and registration of leases.

    But Justice David Majanja said there is a difference of Sh43.4 million between the figure provided by the company and that provided by the advocates.

    “This figure will be resolved once the Advocates file their defense and full discovery is done prior to the hearing. At this stage, I am satisfied that the Advocates have provided a sufficient account of what they received,” said the judge.

    (BD)
  • KEBS blunder to cost taxpayers Sh2bn

    KEBS blunder to cost taxpayers Sh2bn

    Kenyans will pay Sh2.2 billion to a Dubai based firm after the government cancelled an oil inspection contract nine years ago.  This comes after the Supreme Court on Thursday threw out a motion by Kebs that sought to review a last year’s judgement that found it liable for breaching the contract with Geo-Chem Middle East.

    The suit dates back to 2009 when KEBS commenced an inspection and testing program of imported petroleum products and awarded Geo-chem Middle East the tender.

    “It is clear to us that the application before us is a disguised appeal, which seeks to re-open matters already determined with finality by this court…..An application for review was not intended to give a party an opportunity to appeal or relitigate its case. Where such a review is sought, an applicant must lay a basis to the satisfaction of the court that the application for review satisfies the set criteria.” read part of Supreme Court ruling.

    Supreme Court of Kenya [p/courtesy]
    The contracted firm (Geo-Chem) said it established a petroleum inspection facility at the Port of Mombasa that was launched in August 2009 and had started offering services to oil marketers on behalf of KEBS.

    But when the firm asked for payments for its services four months later, KEBS turned its back on Geo-Chem as it directed the Kenya Revenue Authority (KRA) to collect inspection levies from oil marketers on its behalf.

    Documents filed in court show that  KRA collected the oil inspection fees and deposited the money with the National Treasury between March 1, 2010 and March 1, 2012 but KEBS did not remit any funds to Geo-Chem for the services offered.

    Kebs only wrote to Geo-Chem 3 months to the expiry of the contract in March 2012 claiming that the government had suspended the contract until further notice.

    The Supreme Court ordered the Kenya Bureau of Standards (Kebs) to pay Geo-Chem Sh2 billion for breach of contract after the Dubai based firm sought arbitration.

  • KRA targeting homes of land rate defaulters in Nairobi

    KRA targeting homes of land rate defaulters in Nairobi

    Kenya Revenue Authority (KRA) and City Hall have launched a joint crackdown targeting home and office blocks belonging to landlords who have defaulted on paying land rates with some defaulters already served with warning letters should they fail to offset their rates.

    “You are supposed to have paid up all the rate fees for the plot, including any arrears owed to the Nairobi County Government. The County Government Finance Act of 2015 mandates the authority [KRA] to repossess any land property the owner defaults rate payment and reallocate it to the deserving,” a notice pinned on one of the properties read.

    Revenue Act of 2015 was amended in 2018 in a move that gave more powers to the County government of Nairobi to recover land rates from rental income to get the Sh15 billion that was owed to them then.

    The amendment of the of the Act was a also aimed at easing access to property whose owners had defaulted on land-rate payment by allowing City Hall to temporarily repossess such homes and offices to recover the debt owed from monthly rents.

    KRA Commissioner James Mburu [p/courtesy]
    Analysis by the national government discovered that 90% of land and property owners in Nairobi had defaulted on paying their  rates after the county government failed to lower the number of defaulters through closure of office blocks and waiving penalties for defaulters.

    City Hall in February 2020 opted to rope in KRA to help them improve revenue collection from such properties where the taxman will now inspect all revenue streams and manage the taxes through the normal process of assessment, payment, accounting, remission and enforcement through both compliance and debt recovery.

    KRA announced that taxpayers would benefit from a partial relief on penalties and interest on the undisclosed taxes, in a programme initiated on January 1 and runs to December 31, 2023.

    The programme dubbed Voluntary Tax Disclosure Programme (VTDP) was introduced through the Finance Act, 2020 and it aims to grant relief on penalties and interest on any tax liability disclosed in respect to the period between July 1, 2015 and June 30, 2020.

    Nairobi County raked in Sh1.3 billion from fire inspection certificate, housing rent, and land rates but it recorded only Sh3.9 billion in own-source revenue in the six months under focus against a target of Sh6.4 billion.

     

  • Broke NCPB facing auction over Sh7.3bn debt

    Broke NCPB facing auction over Sh7.3bn debt

    National Cereals and Produce Board (NCPB) risks having their assets auctioned over a Sh7.3 billion loan they secured from the Kenya Commercial Bank where the assets were used as collateral.

    The broke board also has another Sh4.1 billion maize subsidy debt and it also owes Sh1.11 billion to the State Department of Devolution, Agriculture Development Corporation (ADC), Agriculture Food Authority (AFA) and County Government of Murang’a.

    The NCPB chairman Mutea Iringo told the National Assembly’s Agriculture committee that the board has un-serviced bank loan of Sh6.38 billion that is still attracting  interest and penalties of up to Sh110 million every month at a rate of 22.5%. The total interest now stands at Sh3.1 billion.

    “The total loan exposure is Sh7.3 billion – Sh6.38 billion un-serviced KCB facility and Sh1.0 billion being the interest charges paid from NCPB resources which is reimbursable,” Iringo said.

    The former PS further explained that due to the failure to pay the loan, the lender recalled the entire loan facility in March 2020 and overdrew the operating accounts the board held at the bank which blocked them from accessing services from KCB.

    NCPB Chairman Mutea Iringo [p/courtesy]
    Iringo also told the lawmakers MPs that the board’s credit score has been greatly impaired with the KCB now pursuing CRB listing of the current board of directors. NCPB now blames the its financial constraints as the reason hindering it’s full participation in the ‘Big 4’ Agenda under the Warehousing Receipt System Project since its stores are in poor state.

    “The implementation of the 2020/2023 strategic plan will require funding to the tune of Sh24.3 billion which will be sourced largely from the liquidation of the government debts, borrowings and disposal of non-core assets,” Iringo added.

    But the NCPB Chairman also told the Silas Tiren led committee that the board is also owed billions of shillings by various institutions totaling to Sh16.22 billion by various ministries and agencies over fertilizer supply and services rendered.

  • Why Group Wants Safaricom’s Likoni Toll Payments Deal Canceled

    Why Group Wants Safaricom’s Likoni Toll Payments Deal Canceled

    Okoa Mombasa is calling upon the Kenya Ferry Services (KFS) to revoke its deal with Safaricom, which requires all tolls at the Likoni ferry to be paid via the company’s M-Pesa service.

    According to the group, cash and payments by other electronic means are no longer permitted, meaning users who do not have a mobile phone with a Safaricom SIM card cannot ride the ferry. The situation they say has resulted in many non-M-Pesa users being turned away.

    Tolls are required for cars, motorbikes and handcart pushers, while pedestrians ride for free.

    The monopoly deal the group says was reached and announced without public consultation, despite KFS’s status as a public organization.

    They noted that the ferry operator has also failed to reveal details of the bidding process that led to Safaricom being selected as the sole processor of payments.

    Okoa Mombasa believes the KFS-Safaricom deal infringes on Kenyans’ right to access information, equality, consumer choice, and freedom from discrimination.

    “KFS’s decision to require all payments via Safaricom’s M-Pesa was as surprising as it was inexplicable – ferry users did not ask this, and there is no legitimate reason for it,” said Uba Suleiman of InformAction, an Okoa Mombasa Member.

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    “It’s yet another case where government is making decisions that impact the people of Coast without actually consulting the people of Coast.” He added

    “We urge KFS to resume accepting cash and other electronic payments immediately,” Suleiman added. “The current monopoly payment system should be suspended until we can have a structured public participation process that helps us create a more inclusive system.” Urged Uba

    Around 6,000 motorists use the channel daily, plus numerous more motorbikes and handcart operators.

    According to research by Okoa Mombasa member Muslims for Human Rights (MUHURI), Safaricom earns between Sh8 and Sh100 per toll, depending on the size and weight of the vehicle crossing the Likoni channel. Around 6,000 motorists use the channel daily, plus numerous more motorbikes and handcart operators.

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    The 500-metre Likoni channel is the preferred route between Mombasa island and the mainland side of Likoni, a mostly residential area.

    Separately, Okoa Mombasa has called for charges to be dropped against MUHURI chairman Khelef Khalifa and rapid response officer Francis Auma, who were arrested for protesting the KFS-Safaricom deal on February 18, 2021. They face charges of “causing an obstruction.”

    The pair were arraigned and charged in court earlier this week without witness statements, which forced their hearings to be adjourned to March 11.

  • FRC to use second-hand car dealers in the war against money laundering

    FRC to use second-hand car dealers in the war against money laundering

    Dealers in second-hand cars will now be forced to reveal the identity of their buyers and sources of their income in the latest move aimed at crushing money laundering syndicates.

    The Financial Reporting Centre (FRC) is determined to lay out a legal framework that will compel all car dealers to report all transactions exceeding Sh1 million and even smaller suspicious payments.

    The proposal that is only awaiting approval by the Cabinet and Parliament will have second-hand car dealers designated as non-financial reporting institutions together with real estate agents, accountants and gambling joints like casinos.

    FRC boss Saitoti ole Maika said that report by a high-powered anti-money laundering task force on risk assessment uncovered that second-hand car industry make transactions worth millions without questioning the source of the buyer’s money.

    Investigations have shown that the second hand-car industry is a hotbed of money laundering where customers spending more than Sh1 million simply walk-in to buy or make deposits with the balance being settled in installments.

    “Our intention is to mine data on people buying cars from the dealers.” said Mr Maika.

    The new rule will have dealers of used cars obligated to disclose details of their buyers including names, addresses, date of birth, ID number, occupation and date of transaction.

    The second -hand car industry is 90% of the market share accounting for about Sh70 billion every year but FRC reckons that the industry is flooded with drug dealers and fraudsters who buy cars often in cash and then sell them to clean proceeds of dirty dealings.

    “Car dealers have a big challenge because it is an industry that’s not regulated. Other than the NTSA issuing permit prescribing them as second-hand dealers, it is more or less unregulated.” Mr Maika said.

    The move by the FRC comes at a time when the  country is looking for mechanisms to add more businesses and professions to the list of entities obligated to play a watch dog role on money laundering.

    Designated entities will be required to submit to the FRC an annual compliance report by January 31 of the following year. The Proceeds of Crime and Anti-Money Laundering Act (Procamla) requires the designated institutions  to report any suspicious or unusual transaction to the FRC .

     

     

  • How Kenya became a money laundering haven

    How Kenya became a money laundering haven

    Kenya is now ranked among countries with rampant money laundering and financial crimes in the world after a report tabled before the US Congress exposed the country’s vulnerability through the increased use  of mobile money transfer platforms, the hawala system of banking and Trade Based Money Laundering.

    The report is part of the annual International Narcotics Control Strategy tabled before the US Congress to monitor the countries most affected by the vice and initiate measures to curb illicit financial transactions that aide criminal and terror activities.

    Kenya is now ranked among top money laundering countries in the world with diaspora remittances totaling up to Sh178 billion between January and August 2020 including proceeds of narcotics trade.

    The report also showed that dirty money has continued to circulate in the world despite the negative effects COVID-19 has had on economies across the world with many ravaged, shut or seriously slowed.

    “Criminals not only continued to perpetrate traditional financial crimes, but devised new ways to exploit the pandemic through counterfeiting essential goods and telephone and email scams promoting health or medical products,” the report read in part.

    Kenya is listed among other notorious African countries including Nigeria, Algeria, Ghana, Morocco, Mozambique, Tanzania, Liberia and Benin. The list also has the United States, UK, Colombia, Cyprus, Cuba, Italy, Mexico, Turkey, United Arab Emirates, Vietnam, India and Cayman Islands.

    The continuous flow of illicit money is majorly aided by corruption in many parts of the world, lack of political will, ineffective institutions and inefficient anti-money laundering laws.

    Kenya remains exposed to money laundering and terror financing in the East African region since it became a pioneer in mobile money transfer that has been used abused to finance terror activities. Weaker laws also maker it possible to infiltrate formal and informal channels through cybercrime, corruption, wildlife trafficking and smuggling of illicit drugs, counterfeits and illegal timber trade.

    The proximity of the country with war torn Somalia is also attracting laundering of piracy-related proceeds with a thriving miraa and charcoal trade that is unregulated. The Central Bank of Kenya has also failed in ensuring that all financial transactions above one million are flagged.

     

  • Kenyans On Why They Don’t Bother Engaging Safaricom CEO Ndegwa Like They Used To With Collymore

    Kenyans On Why They Don’t Bother Engaging Safaricom CEO Ndegwa Like They Used To With Collymore

    Social media has become great and prompt medium for direct engagement between companies and their clients, updated companies use the medium to maintain personal touch with their clients. They also use the feedback from clients to better their services.

    Almost any sane company in the world today has a Twitter, Facebook, Instagram, YouTube and even the more savvier ones have tiktok and Snapchat. The core goal here is reaching out to your clients, becoming easily accessible, people live on the internet so firms fo where they reside.

    Customer Service to clients is slowly moving away from traditional calls to messaging on social media.

    The late Bob Collymore was one of the most active corporate executives on TwitterTwitter. He earned himself the title tweeting boss, while his staff would attend to complaints from customers, Bob too responded to some of the issues raised. It’s through this that people learnt if you wanted your issue addressed with the fastest speed all you need was to tag him on your tweet and once you get his attention, he’d personally follow up to its address. He was a hands on manager on that.

    Exit Bob, enters Peter Ndegwa, the low key figure wasn’t previously an active social media user but by the virtue of his office and company, he was forced to join the Twitter wave.

    Created in November 2019, his TwitterTwitter account remained inactive for long before he started tweeting sometime late in 2020. And with only 68 tweets as of the time of press, his account is a dry timeline , not as interactive as his predecessor and we can baptize his Twitter as the boring CEO TL. That doesn’t however mean outside the 240 characters space he doesn’t work. SafaricomSafaricom is still the most profitable company in Kenya.

    Riaz Gilani, a regular Kenyan on Twitter user seems to have realized the loud silence of the account and opened a conversation on Twitter.

    “He is anti social.. Who is he anyway? As far as I’m concerned, @SafaricomPLC died when Bob Collymore died.” One Jackie Arkle replied.

    Ahmed Salim a PR practitioner noted, “He never responds.” To which Mihr Thakar replied, “Yeah he probably doesn’t handle his own twitter account. Mans seems like a workaholic.” Prompting Salim’s input, “You can hire someone. You can have a minute to speak to your audience – if he truly seen the history of Safaricom customer care – he would know his presence and voice makes a huge different.”

    Bari Yahiti says, “Bob Collymore had a very powerful online, social, and corporate personality and his presence was felt across the three “sprectums”. Corporates felt him, the society felt him, Netizens felt him, making it easy to engage him at all these levels. Ndegwa….woi!” Another user Steve says, “I said it before; the CEO of Safaricom must impact culture. You can’t simply be a manager/director within the company. You MUST impact culture.”

    Throwing jabs Genje notes, “Bob Collymore knew banter. This new guy is just another rigid Kenyan corporate without a personality.”

    Not everyone has a problem with his inactive account like Joseph Muoria who thinks it’s okay for him not to be active on social media, “Hatutaki kusumbua @PeterNdegwa_. We shouldn’t bother him with our petty, trivial and less-important issues because that position is no joke.”

    But there are also those who’ve contacted him and he acted upon their complaint like Elon Nduati, “I once escalated a Home Fibre problem to him and he responded. It was sorted the very next day.”

     

  • South Sudan gets partial access of accounts as row with Jirongo intensifies

    South Sudan gets partial access of accounts as row with Jirongo intensifies

    A Kenyan court has allowed South Sudan authorities to partially access their bank accounts at NCBA and Stanbic bank amidst a legal battle with a firm belonging to ex- Cabinet minister Cyrus Jirongo who is demanding more than Sh5 billion form Salva Kiir’s administration.

    The move comes after South Sudan challenged a decision to freeze the accounts which they protested as a declaration of war by Kenya since it would hinder delivery of services unable to it’s population.

    The court has now allowed them to operate the accounts on condition that they leave a balance not less than Sh5.4 billion as Yusung Construction continues to appeal the order that lifted the a complete freeze on the accounts.

    Jirongo’s firm won the deal to construct John Garang Military Academy and Natinga Warehouses in 2008 but later fell out with the government of Salva Kiir following a contract breach pushing the ex-minister to rush to court.

    Ex-minister Cyrus Jirongo during a past court session [p/courtesy]
    The freezing order was granted last December but has been extended by different judges until Justice Said Chitembwe lifted the order in favour of South Sudan authorities on February 26 since the government could not meet some its obligations.

    Judge Chitembwe allowed South Sudan to operate the bank accounts held at NCBA and Stanbic Bank freely pushing Jirongo’s firm to challenge the move where Justice Joseph Sergon granted Juba partial access to the accounts.

    The court was told that South Sudan paid Yusung Construction Sh2.6 billion to begin the works but nothing was done after the foundation was laid down till two years ago when Jirongo’s firm moved to the East African Court demanding Sh5.4 billion as sums due with interest.

    Yusung Construction had complained that they were forced to move construction to different sites four times due to violence in the war-torn country with some areas also proving prone to flooding.

    The case was the forgotten till November last year when the firm reached an out of court deal after one Biong Pieng Kuol Arop, an official of South Sudan’s Finance and Planning ministry committed to have Jirongo paid the claimed Sh5.4 billion.

    The deal gave Yusung Construction permission to attach South Sudan’s assets to recover the sums in case of a default but it is that deal that has now seen South Sudan’s accounts in  Kenyan banks frozen with Juba now claiming that Mr Arop did not have the authority to negotiate deals on its behalf.

    Juba administration is also accusing Jirongo of using fraudulent means to obtain the out-of-court settlement which it later used it to dupe Milimani High Court into freezing their two accounts.

     

  • CEO Seeks Sh1.9B In The Big Fallout Of Lancet

    CEO Seeks Sh1.9B In The Big Fallout Of Lancet

    Lancet Kenya CEO Ahmed Kalebi is seeking close to Sh1.9 billion from the laboratory services firm in the wake of a shareholder fallout with his French and South African partners.

    Dr Kalebi, who helped found the firm in 2009, Monday sent a separation agreement to the director of Lancet ahead of the firm’s board meeting Tuesday, setting the stage for one of Kenya’s largest executive payouts.

    He informed his South African and French partners of his intention to quit the firm on April 30 when his employment contract as East Africa CEO and chief consultant pathologist expires.

    “The current term under the aforementioned employment contract is set to lapse on 30th April 2021 and our client does not wish to apply for a new term,” said a letter sent to the firm by Dr Kalebi’s lawyer, Donald Kipkorir.

    “The total claim under the employment contract and under shareholder agreement is Sh1,851,879,151.75 which sums our client claims,” says the letter.

    He reckons that the majority shareholders have sidelined him from Lancet operations, including hiring of executives while diluting his ownership.

    In 2009, Dr Kalebi, a pathologist, set up Lancet Kenya as an offshoot of its parent company in South Africa.

    It operated under Pathologist Lancet Kenya (PLK) and Lancet Services Company (LSC).

    In 2019, France-based multinational Cerba Healthcare bought shares in South Africa’s Lancet Laboratories for an undisclosed amount in a deal that saw it take control of the East African unit headed by Dr Ahmed Kalebi.

    Lancet SA holds a 49 percent stake in the joint venture while Cerba Healthcare has 51 percent.

    The joint venture, however, did not include operations in South Africa. Cerba became the majority shareholder of Lancet Kenya while Dr Kalebi remained a minority shareholder with an estimated 20 percent stake.

    Dr Kalebi currently owns 7.67 percent of PLK and 10 percent of LSC, according to Mr Kipkorir’s letter. He was on a monthly pay of Sh1.76 million.

    Dr Kalebi is seeking overtime accrued from May 2009 to April 2021 amounting to Sh473,523,080; bonus pay for 11 years of service of Sh54.7 million; gratuity pay of Sh14.5 million and a golden parachute or exit package of Sh100 million.

    This pushes his employment claims to Sh660 million.

    “Our client wants his shares in PLK and LSC to be converted into preferred shares and free from any dilution without our client’s consent,” Mr Kipkorir said.

    He is also seeking goodwill payout for having built the firm and the brand over the past 12 years. The East African unit is said to generate annual sales of Sh2.5 billion.

    “We are under instruction to claim for goodwill in the sum of Sh1,167,738,000 being the weighted average of our client’s contribution to the business brand and goodwill based on OECD’s recommended guidelines on pricing of intellectual property since 2009 to date,” Mr Kipkorir said.

    Dr Kalebi often recounts his journey from growing up poor in Kibera to owning the state of the art pathology centre, which he and his wife, Kamari Makka, helped to grow.

    (BD)

  • Kenya Power to pay electrocuted boy Sh15.7 million

    Kenya Power to pay electrocuted boy Sh15.7 million

    The court has ordered Kenya Power to pay a boy in Meru more than Sh15 million as damages for the injuries he suffered after he was electrocuted while looking after his parent’s cattle.

    Justice Francis Gikonyo ordered the electricity retailer to pay the boy a  sum of Sh15,729,500 as damages for pain, suffering and loss of amenities, medical expenses incurred, doctor’s fees and for future medical expenses.

    “The plaintiff pleaded special damages for which he produced receipts in support. Contrary to the contention by the defendant, all the receipts produced by the plaintiff bore revenue stamps,” said Judge Gikonyo.

    The evidence adduced in court proved that the boy touched a live electric wire after he fell at Antubetwe Location in Igembe North District in October 2015 where the wire was lying loosely on the ground. Justice Gikonyo stated that that was a case of negligence on the side of Kenya Power.

    But Kenya-Power in their submission said that it was not clear where the incident occurred and they also accused the boy of being careless with his own safety.

    The boy was 16 years old when the incident that forced him to drop out of school happened. He was admitted at Maua Methodist hospital for four months after his arm was amputated due to severe burns. He needs a prosthesis that costs Sh8 million to do some daily activities Sh1 million for it’s maintenance.

  • Businessman in Sh24 debt loses bid to delist firm from CRB

    Businessman in Sh24 debt loses bid to delist firm from CRB

    The owner of the company that was listed in the Credit Reference Bureau (CRB) for defaulting to offset a Sh24 debt has lost the bid to have Ecobank pay him damages for alleged defamation.

    Charles Gitundu Mwangi, the proprietor of Rural Technology Enterprises Ltd was listed on the CRB in December 2013 after he failed to convince the High Court that the information provided by Ecobank to CRB was defamatory and caused his company losses.

    Mwangi told the court that the information that the bank relayed to the CRB was a ploy to paint Rural Technology as a broke company without financial integrity and without capability to meet financial obligations after Justice Maureen Odero faulted him for leaving his coperate dormant for three years hence attracting bank charges.

    “I find that although it may have been petty for the bank to forward the company’s name to CRB for a debt of only Sh24, it was certainly not illegal or unprocedural for the lender to do so. The account was in debit and no matter how small the amount, the money was owed to the bank.” Justice Odero said.

    Evidence presented in court shows that Mr Mwangi opened the account in 2010, deposited Sh3,000 and a cheque of Sh10,000 then he went quiet without any activity in the account until his firm was listed on the CRB in December 2013 over Sh24 debt.

    But Mwangi claimed that he never borrowed any loan from the bank meaning it was wrong for them to forward information about his company to CRB for ‘allegedly’ defaulting to settle the loan.
    He was however faulted for failing to check on the status of his firm’s account regularly and for ignoring the alerts from the to settle the small charges but he argued that his company was never officially notified about the debt and has never been granted an opportunity to pay it.

    Mr Mwangi maintained that the company never borrowed a loan adding that the  account was dormant and therefore no bank charges ought to have been levied against it.

    “The account was in credit when I opened it and the statements issued by the bank show that no withdrawals were made. In fact, the lender was the sole beneficiary of the company’s money by charging maintenance fees,” he said.

     

  • Businessman In CRB Listing Suit Against Ecobank Loses

    Businessman In CRB Listing Suit Against Ecobank Loses

    A businessman whose company was listed in the Credit Reference Bureau (CBR) as a defaulter over a debt of Sh24 has lost the bid to have Ecobank pay him damages for alleged defamation.

    Charles Gitundu Mwangi’s Rural Technology Enterprises Ltd was listed on the CRB in December 2013 after he failed to persuade the High Court that the information provided by Ecobank to CRB was defamatory and caused his firm substantial losses.

    He testified that the false information relayed by the lender to CRB was calculated to depict Rural Technology as lacking in financial integrity, incapable of meeting its financial obligations and not credit-worthy.

    Justice Maureen Odero, however, faulted him for opening the corporate account and leaving it dormant for three years, attracting bank charges.

    The judge said the bank was fully entitled to debit the company’s account with the usual bank charges and in the event that the account went into debit, then the bank was entitled to charge interest at the normal bank rates.

    “I find that although it may have been petty for the bank to forward the company’s name to CRB for a debt of only Sh24, it was certainly not illegal or unprocedural for the lender to do so,” observed Justice Odero.

    Loan facility

    The judge noted that the fact Rural Technology did not take out a loan facility with the bank “is neither here nor there.

    “The account was in debit and no matter how small the amount, the money was owed to the bank.”

    How did the company incur Sh24 debt? Evidence presented in court shows that Mr Gitundu, the firm’s managing director, opened the account in 2010 and deposited Sh3,000 and a cheque of Sh10,000. He then went quiet with the account until the company’s name was listed on the CRB in December 2013

    Mr Gitundu argued that he never borrowed a loan or credit facility from the bank and indicated it was wrong for them to forward information about the company to CRB on alleged default.

    But justice Odero had a different view on the matter. She said that given the very minute the debt was incurred, the bank ought to have contacted the company to settle the peanuts.

    On the other hand, the judge said Mr Gitundu equally had a duty to check on the status of the company’s account and make good any arrears due to the bank.

    “To open an account and just abandon it is not good business practice,” observed justice Odero.

    The businessman claimed that Ecobank informed CRB that the company had defaulted in repayment of a loan facility advanced to it and owed the lender Sh24.

    Credit facility

    He complained that the company was never officially notified about the debt by the bank nor was he granted an opportunity to pay it.

    He maintained that the company never borrowed a loan or advanced any credit facility by the bank.

    Mr Gitundu further argued that in view of the fact that the company’s account was not operational (dormant), no bank charges ought to have been levied against the account.

    “In any case, the account was in credit when I opened it and the statements issued by the bank show that no withdrawals were made. In fact, the lender was the sole beneficiary of the company’s money by charging maintenance fees,” he stated.

    He told the court that the report lodged by the Ecobank with CRB made Co-operative Bank reject his application for an overdraft facility, a move that occasioned huge losses to the company.

    Ecobank Relationship Officer Maweu Syovo opposed the suit saying the account was in debit due to banking charges which had remained unpaid. The witness said the bank had an obligation to refer names of defaulters to CRB.

    Dismissing the case, Justice Odero said Mr Gitundu never called an accountant to testify on behalf of Rural Technology or even attach audited accounts to prove the firm’s financial losses.

    (Nation)

  • Kenya’s Mobius Motors In Serious Cash Crunch

    Kenya’s Mobius Motors In Serious Cash Crunch

    Kenya’s only home-grown automaker, Mobius Motors, is facing financial difficulties that has seen it seek court protection from the Kenya Revenue Authority (KRA) tax demands that may force it to shut down.

    The High Court has stopped KRA from demanding a Sh73 million tax from the firm due to the its financial constraints.

    Since its launch in 2014, Mobius Motors has only produced less than 80 test vehicles and is among a number of African firms hoping for a slice of the continent’s largely underdeveloped market for new cars.

    Justice Francis Tuiyott said the taxman should not execute decision of the Tax Appeals Tribunal dated July 30, 2020 that allowed KRA to demand the debt from the company, which is a subsidiary of the Mobius Motors Limited UK.

    However, the suspension of the tribunal’s decision is on condition that Mobius provides a bank guarantee of Sh40 million within 60 days, pending the determination of its appeal against the Tribunal’s ruling.

    Judge Tuiyott made the order while ruling on an application lodged by the automobile firm saying it will suffer substantial loss if Tribunal’s ruling is not suspended.

    The firm demonstrated its financial vulnerability by producing its audited financial report to convince court that it is in dire financial strain and if the taxman invades its bank accounts, it may collapse and shut down its operations in Kenya by reasons of insolvency.

    The financial report was for the year ended December 31, 2019 and showed that the company had a liability of Sh434.3 million and a shareholders deficit of Sh204.8 million.

    It said as at August 30, 2020, this position had deteriorated to a sum of Sh649.2 million in liability and shareholders deficit of Sh389.1 million.

    “Looking at the audited reports produced, Mobius has made out a strong case that a payment of Sh73,235,647 from its resources would most probably have an adverse effect on its operations. That would be substantial loss,” said justice Tuiyott.

    Mobius produces a boxy, no-frills SUV designed for both the challenges of Africa’s rugged driving conditions and the modest budgets of African consumers. The entry-level version is priced at Sh1.3 million, half the going rate for a second-hand SUV model imported from Japan. The firms is raising financing for a full production launch that is years behind schedule.

    (BD)

  • Court Orders Jambo Biscuits To Pay Britania Employees Sh37.7M Deducted But Not Remitted To Sacco

    Court Orders Jambo Biscuits To Pay Britania Employees Sh37.7M Deducted But Not Remitted To Sacco

    Jambo Biscuits Limited will now pay Britannia Sacco Sh 37.7 million, monies deducted from employees of biscuit manufacturer but which were not remitted to the Sacco.

    “The plaintiff has proved its claim. I enter judgement for the Sh37,707,107.40 as prayed,” ruled Tuiyot.

    However, the judge said the plaintiff did not specify the rate of interest it seeks on the amount, it shall attract interest at court rates from the date of filing of the suit.

    The basis of Britannia’s claim is that Jambo made deductions from its employee’s salaries for the months of July 2007 to December 2007, but failed to forward the amount to the Sacco as required.

    It was added that towards part of settlement of the claim, Jambo made eight payments amounting to Sh. 904,000 during the months of November 2007, December 2007 and January 2008reducing the principal debt from Sh. 2,312,518 million to Sh. 1,408,518 million. The amount claimed was substantially more being Sh. 37,707,107.40 million.

    Testifying in court, Daniel Kaliku had asked the court to compel the employer to pay the amount plus interest of 5 percent per month.

    Britannia Sacco, a co-operative society, filed a case in court seeking a claim of Sh37.7 million

    In defence filed on November 21, 2013, Jambo denied that its employees are members of Britannia Sacco or that it made deductions from its employees on an account of that membership.

    The biscuit maker argued that any deductions made were duly remitted to Britannia and denied owing the Sacco the amount. The judge, however, ruled that the Sacco had proved the claim.

  • Jumia Kenya Online Store Accused Of Exploitation

    Jumia Kenya Online Store Accused Of Exploitation

    Jumia Online store is currently embroiled in a self instigated war with a section of Kenyan influencers that the company has been using to market their products online mostly on Twitter.

    It all started with a complaint on Twitter raised by a user Osama Otero who accused the firm of withholding his payment of Sh70,000. While using informal conversations, the fed up influencer used the best language he thought could get the attention of the management that he claim has been taking him rounds for too long.

    What followed was a demand letter from a law firm. It has become a norm in Kenya for ambulance lawyers to prey on bloggers as an intimidation tactic.

    Osama was given 12 hours to delete the ‘defamatory’ sentiments he had made about the marketing official Ms. Christine Mutugi whom he accused of blocking his payments.

     

    He deleted the tweets in compliance with the the demand letter but the onslaught didn’t end.

    He went ahead to cut links with the firm.

    Then it went further with others joining in to claim mismanagement in the accounting.

    https://twitter.com/isaac59218789/status/1367829898249768963?s=21

    Influencer marketing has been a fret source of income of youths in Kenya where the unemployment rate is close to 60%. It has also become a norm for big corporates who spend millions in mainstream advertising to exploit the emerging marketing force. Some pay very low and some take them in circles to the bitter end of non payment. Osama’s case is not isolated but a one of many who don’t speak out openly for the fear of losing out on other gigs.

    It also opened a box of pandora of complaints from others including shoppers in the platform.

    https://twitter.com/vice_vkey/status/1367855608641228802?s=21

     

    Jumia is a leading e-retailer in Kenya and subsidiary of Jumia Grouo and the first Africa-focused tech start-up to list on the New York Stock Exchange.