Royal Media Services founder S.K. Macharia, concerned at the continuous loss of revenues through fraud, has put a number of senior managers and editors under investigation.
DCI officers were dispatched to Communications Centre in Kilimani, the head offices of the Royal Media broadcast empire, to unravel what is believed to be an internal syndicate through which the company has been losing an estimated Ksh20 million per month.
The officers raided RMS offices on Monday 5th August and interviewed senior employees in human resources, advertising, accounts and editorial. People familiar with the investigations said HR officers were taken to the DCI offices to record statements.
It is understood that some of the cash is lost through ghost workers. A recent staff audit is said to have revealed over 100 illegal workers. The fraud investigations started days after the sacking of Human Resources Director Rose Wanjohi. BT could not independently establish if she is linked to the fraud.
The investigators are also looking into the investment of Ksh2 billion in the company’s video-on-demand service Viusasa, which has failed to pick up. The service is struggling to attract subscription despite heavy marketing and investments.
Also being investigated is the upgrade of RMS’s Kisumu office where millions were spent on recommendations of the editorial leadership. The probe is also looking into unapproved salary cuts for correspondents and what is described as ‘overpaid’ newscasters/presenters.
Royal Media Services is the leader in the TV and radio market, with more than 50% market share in both segments. Its Citizen Radio tops national listenership ratings, while Citizen TV is most viewed TV station followed by its vernacular (Kikuyu) TV station, Inooro.
These stations, alongside other vernacular FMs across the market, rake in millions in advertising revenue every day but it turns out not all revenues reach the RMS accounts. Overall, schemes appear to have been set in place to rip off the company.
What has raised concern is the reduction of correspondents’ pay at a time when they were expecting a raise. Most other staff have stayed for years without an upward pay review, yet the media house they work for is supposedly the richest in the industry.
Fraud is common across media houses. Nation Media Group recently sacked senior people in management, finance/salaries, procurement and HR over suspected fraud scheme that cost the company millions. In 2016, there was a fraud syndicate at Standard Group advertising where some employees diverted revenues from advertising and obituaries into a private account.
For newspapers fraud is often reported in distribution where the print run is inflated and sales revenue from the extra copies is pocketed by those involved, leaving newspapers with thousands of unsold newspapers.