How city lawyer Ken Kiplagat forced Nation Media to publish KPMG report on Safaricom
It is now emerging that Moi-era and controversial lawyer Kenneth Kiplagat arm-twisted Nation Media Group into publishing a controversial story on Safaricom based on a draft audit report by KPMG.
The article, quoting the report, implicated top Safaricom managers in procurement scandals. It was published on Monday as the main story for Business Daily and inside the news pages of the Daily Nation.
According to numerous emails and text messages reviewed by Business Today, Mr Kiplagat appears to be a bitter man on a revenge mission for ‘losing’ the police frequency bid to Safaricom. The dispute over the frequency ended up in court and was thrown out for lack of merit.
So when the leaked KPMG report on Safaricom landed in Mr Kiplagat’s hands, he found a new weapon to get Bob Collymore to “sit down” and talk to him over the frequency loss, according to people familiar with the dispute between the two parties. Here ‘talk’ is interpreted to mean “some kind of pay off”, one of the persons said.
In an email circulating among top editors and journalists of the Nation Group of Newspapers, and which we now have access to, Mr Kiplagat, managing partner at Okoth & Kiplagat Advocates, applied pressure on NMG’s Editor in Chief Tom Mshindi to run the story on the audit report even when it had earlier been indicated that it was still a work in progress.
Mr Kiplagat claims in the email to have “won round two” and that Nation journalists would have no choice than to run his story. “It didn’t have to get to this point. Bob (Collymore) needed to talk to me,” he said rather pompously in an email.
He claimed he was about to publish an advert that was supposed to indict media for its apparent side stepping of stories critical of Safaricom.
In one email communication on Friday May 13th, with Nation’s public editor Peter Mwaura, Mr Kiplagat says:
“I am sure you are aware that your newspapers will not print any factual story which paints Safaricom in an unflattering light. Articles are routinely pulled out at the last minute by Safaricom overseers in your editorial rooms. The KPMG report will be serialised by London newspapers and this will be a damning indictment of the press in Kenya and its notional independence. I am certain that my client will not be able to place this ad in your newspapers even if it was paid for. My client is polishing up the ad and will present it to the Daily Nation and Business Daily shortly and wait to see the reaction.”
Mr Mwaura’s reply a few hours later was brief: “Thank you for the preview. I am waiting to see.”
On Monday, two days later, the Nation and Business Daily ran the story.
“The Nation people either had to print my ad (and look totally ridiculous) or refuse and fall straight into my trap,” Kiplagat in said in an email to a confidant.
He told another of his associates on email: “They opted to refuse to run my ad and pre-empted my complaint by running the story. Either way the desired result was achieved. Really not possible to kill a story in the face of a very determined protagonist who wishes to highlight a fundamental truth.”
The advertisement, of which we have a copy and which is on a Tetra Radio Limited letterhead (the company that has been fighting Safaricom over the licence issued by Communications Authority of Kenya), claims that the journalists had been more or less been compromised by Safaricom’s heavy punching in the media buying space.
The Tetra Radio Project
The “advert”, which is shy on details, is signed by one Casey Burns, as the Chairman of Tetra Radio Limited. A search on the internet lists Casey Burns as a Director of Tetra Radio Project.
Tetra Radio claims that the licence Safaricom used to set up the Ksh14 billion communication security system had earlier been awarded to it. It is quite interesting that for a company that was angling for such a huge contract is known only in the corridors of justice.
Tetra (Terrestial Trunked Radio) frequencies are mobile radio and two-way received transceivers that are usually reserved for government agencies, emergency services and the military. How Kiplagat got such a frequency is another story, but during Moi’s era, anything was possible, especially for those who are well connected.
Kiplagat is said to have earlier received a couple of million dollars from frequencies he had been allocated during Moi’s era.
Safaricom a magnet for suits
Safaricom’s growing size has attracted numerous bids for what’s seen as its huge trove of cash. Safaricom’s announced last week that it expects to make history in East Africa by hitting US$2 billion in revenues, US$1 billion in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), or the measure of the amount of cash that the business is generating purely from its operations.
But a little reported note was that capital expenditure in the financial year 2017 was in the range of Ksh32 billion to Ksh33 billion. This is addition to its operations expenditure of Ksh41 billion, which includes everything that the company spends on from publicity, leased lines, IT operations expenses, rent, insurance, office tea etc.
In essence, Safaricom’s management was signaling that the firm will maintain its investment spend at roughly the same level it has been doing in the last five years. With the business generating Ksh30 billion annually in free cashflows, Safaricom is saying it will continue spending, annually, the equivalent of what it cost to build the Thika Super Highway in the coming years.
Safaricom has spread into every corner of the Kenyan economy, creating a cottage industry of tenderprenuers, extortionists and blackmail artists who have emerged to cash in on this money that Safaricom spends annually.
This messy affair has captured the attention of mainstream and social media, and threatened to damage the careers of some of those who have been mentioned the draft report by KPMG.
The internal audit report was ordered by Safaricom CEO, Bob Collymore in a bid to streamline operations at the giant company. He invited KPMG to review a number of tenders that the company had given out during the last two years, and recommend actions that needs to be taken, if any, to streamline operations.
The document has provided fodder for tenderprenuers who thrive by preying on companies, especially those with reputations to protect.
Next Read >> How lawyer used advert against the media to blackmail Nation
GDC CEO gets mixed up in hiring of senior manager
Johnson Ole Nchoe is embroiled in an internal cold-war with a section of management who see him favouring one candidate for communications manager position
Tension is brewing within the Geothermal Development Corporation (GDC) boardroom as the company scouts for an in-house communications and marketing manager.
The company’s CEO, Mr Johnson Ole Nchoe, is embroiled in an internal cold-war with a section of the board and management who see him favouring a former GDC communications manager, Ruth Musembi, who left two years ago.
The post of corporate communications and marketing manager fell vacant in March 2015 after Ms Musembi resigned under unclear circumstances, claiming to have done so under duress. She even requested the human resource office to release part of her pension.
Her resignation letter dated March 16th 2015 indicated she would cease being a GDC employee on 30th April, 2015.
“I have tendered my resignation effective today,” she wrote in her resignation letter seen by Business Today, which was sent to human resources general manager Irene Onyambu and copied to the managing director and the general manager for corporate affairs.
“I will serve one and a half month notice and utilize my outstanding 30-day for the rest of the notice. Please, organize my final dues. I would like to access the portion that is permitted under the law.”
Four months later, in August 2015, she was back at GDC after being rehired under a one-year contract without competitive interviews being conducted.
The contract was silently renewed in 2016, according to insiders at GDC, in breach of the company’s hiring policy.
Meanwhile, after returning on board on contract, Ms Musembi, who worked earlier for NEMA as communications manager, is said to have immediately hired a PR agency linked to her to manage the company’s communication needs, at a time the communications department was seen to be overstaffed yet underworked. This elicited protests from the staff who collected signatures in a petition to denounce the act.
These so-called whistle-blowers were reportedly punished by being transferred to different departments. “The then general manager Christopher Leparan and the CEO Johnson Ole Nchoe desperately invoked the transfers as a mechanism to punish the staff,” said the source. “The transfer allowances paid to the staff ran into millions of shillings.”
Two and a half years after resigning, Ruth Musembi is set to make a comeback as to GDC’s payroll, if the CEO has his way. Her contract ended on 31st August 2017, in a move that is likely to cause uneasiness in the board as well.
In June 2017, GDC advertised the post internally. The advert, which read as if crafted to suit Ms Musembi, a former teacher, required a minimum of 12 years of experience as a manager among others, in what was seen as a ploy to lock out younger managers in the department who would be interested in the job.
Ironically, when GDC advertised for the post of General Managers, a more senior position, it asked for only five years’ experience. The staff union protested against the internal advert, and it was silently pulled down. The company then advertised externally in the newspapers but reduced the number of years of experience from 12 to 10, with 5 as a manager.
Machine that lets you make your own beer at home
The company has agreed on delivery of Sh13 million portable breweries to Russia and it is in negotiations in Thailand, Tanzania and other countries
For beer lovers who dream of brewing their own pint, a portable brewery from the Czech Republic may be just the thing — if they have Ksh13 million (US$124,000) to spare.
Fitting into a standard shipping container, the “Smart Brewery” made in Prague by the Well Service company can produce up to 525 hectolitres of beer, or 2,000 pints a week.
“We wanted to make a brewery that would be mobile, possible to deliver anywhere in the world, with a simple use and not space-demanding,” Pavel Pozivil from the Well Service said.
“You can put it anywhere on a solid surface, link to water and electricity sources and you can start brewing,” he said.
Well Service has already agreed on delivery to Russia and it is in negotiations in Thailand, Tanzania and other countries.
By capacity, the Smart Brewery ranks far below even the mini-breweries that have sprung up in dozens of Czech towns in recent years. But it could suffice as an additional offer on tap, as it does for the owner of the Gourmeta pub in Prague.
“When you follow the procedure and you have a good recipe, then it is no problem to brew an excellent beer,” said Radek Spacil, a co-owner of Gourmeta, which completed its first brew with the Smart Brewery on September 2.
Kenya’s highest paid CEO earns Sh1 million per day
Business Daily blow-by-blow explanation proves that indeed, James Mworia, earned Ksh375.6 million in the year ended March 2017
Everyone wants to earn lots of money, yet not many get the chance. The select few who are lucky or work hard enough to deserve seven-figure salaries often prefer it to remain a secret.
That’s why when Business Daily unzipped his wallet for all to see yesterday, Centum CEO James Mworia’s first instinct was to deny and trash the figures.
According to the Business Daily report, the young CEO, in his thirties, earned Ksh375.6 million – yes Ksh375.6 million, or Ksh1 million per day – in the year ended March 2017, a surprising 87 per cent increase from Sh201.1 million the year before. In total, Mr Mworia has earned nearly Sh1 billion for the last eight years.
The new pay strengthened his position as Kenya’s highest-paid CEO, which is equivalent to Ksh31.3 million per month, according to disclosures in the company’s latest annual report quoted by BD, way above Safaricom CEO Bob Collymore’s Ksh10 million.
But Mr Mworia, in several tweets yesterday, dismissed the Business Daily article. Mworia, through his Twitter handle, termed the figures as sensational and inaccurate, explaining that the remuneration was for the entire management team. Business Daily has defended the accuracy of its article with the backing of Centum’s financial reports and disclosures.
— James Mworia (@MworiaJ) September 13, 2017
Business Daily: Why we stand by our story on Centum CEO pay
The Centum Investment CEO James Mworia, in several tweets Wednesday, challenged the accuracy of our story headlined: “Centum CEO sets new record with Sh375.6m CEO pay.”
We indicated, in our response to the tweets, that we stand by our story which is based on the company’s disclosures in its latest annual report.
Here are the reasons why we stand by the story:
Their annual report tabulates key management compensation, which includes pay for executive directors and senior management. This was given as Sh614.9 million and Sh711.5 million for the years 2017 and 2016 respectively, at the group level.
There is additional disclosure of the management team remuneration, now narrowed down to those who are executive directors. This is given as Ksh375.6 million and Ksh201.1 million for the years 2017 and 2016 respectively, again, at the group level.
Mr Mworia is the only executive director at the group level at Centum, and the amounts above are attributable to him alone going by the presentation in the annual report.
“The board has only one executive director to prevent conflicting roles between the Management and the Board of Directors,” Centum says in its 2017 annual report.
Centum chairman Chris Kirubi has said repeatedly that he believes in rewarding his young managers as long as they deliver. While it may not come as a surprise to Kirubi and his board, it has shaken corporate Kenya, where many CEOs earn below Ksh5 million per month.
South Sudan customs official in tax evasion syndicate at Mombasa port
Chief Customs Officer Arop Deng Kuol denies Kenya millions in taxes by under-declaring and classifying Kenyan goods as South Sudan-bound to escape KRA dragnet
Kenya Port Authority (KPA) management is in a dilemma on how to handle the head of port clearance representing South Sudan at the Mombasa port, who is accused of engaging in underhand deals that are costing Kenya millions of shillings in tax revenues.
South Sudan’s Chief Customs Officer Arop Deng Kuol and his deputy, Emmanuel Sukole, are involved in a racket of tax evasion by under declaring of goods, and helping some Kenyan importers to cheat the taxman by classifying their goods as South Sudan bound to escape the Kenya Revenue Authority dragnet.
This year alone Mr Deng, who has been at the lucrative station for the past two years, has so far allowed into Kenya 67 luxury cars and 24 cars that are over the seven year limit set by the Kenyan government by classifying them as destined for South Sudan, according to investigators following the matter.
Investigation into his lifestyle paint a picture of a very rich man, but a frugal spender whose monthly income from the racket ranges between Ksh2.5 million and Ksh5.8 million every month. March 2017, was particularly good month for Mr Deng who made $52,000 (Sh5.2 million) million from the racket by allowing 17 Land cruiser vehicles, four Range Rovers of different models, one 2015 Jeep, and 16 containers that were labelled as containing rubber slippers.
SEE ALSO: Car owners to pay for using highway
“There’s a cartel in Mombasa that specializes in smuggling of goods across the borders. This group is being facilitated by South Sudanese custom officials. The two custom officials arranged for diversions and changing of destinations using South Sudan name. This arrangement enables smugglers to sell their products in any market without paying taxes,” said someone close familiar with the matter, who shared the sensitive report commissioned by an inter-agency task force between Kenya and South Sudan.
“In return the two gentleman are paid what would have been the tax for the governments across the borders,” added the person.
Mr Deng can’t be touched because “he is close to some powerful people in Juba”. The two officials also make money in port clearance. Once goods come in, container go through the Container Freight Station (CFS), but the two officials circumvent the process by working with agents to clear the goods from the port.
“Kenyan port authorities can’t do anything because the goods are declared as headed to South Sudan, and so their hands are tied because they can’t meddle in the affairs of another sovereign state,” the person said.
Sources within the inter-agency task force say the South Sudan embassy in Kenya is aware of the problem and looking for ‘diplomatic ways’ of dealing with the errant officials at the Port of Mombasa.
Mr Deng denied any involvement in the racket, saying he is currently on leave and is in Juba, though sources said he had been sent on forced leave. “I have heard such stories from people,” he said in a phone interview, “but they are just jealous and they want my position.”
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