In Summary
  • In 2014 some 15 State corporations made Sh21.2 billion in profits.
  • In the years that followed, patronage-based appointments of incompetent managers, tough economic conditions and corruption have seen them deliver just Sh3.7 billion by 2017.
  • Smart Company looks at what went wrong with the development model through State-owned enterprises and failed reforms even as the din to re-nationalise Kenya Airways is being peddled as the solution for the ailing national carrier.

The iconic Kenyatta International Convention Centre at the heart of Kenya’s capital has been a symbol of political fortunes much as it has defined the country.

During the Kibaki presidency, it defined the spirit of a country dispossessed by decades under President Moi and the willingness to take back what had been plundered from public coffers to sustain a narrow elite represented by Kanu.

When Narc swept into power, it forcibly wrestled it away from the party in 2003 and set in motion efforts to rebrand and reinvent it to become a leading venue for regional and international conferences.

However to date, the land on which the monument stands, valued at Sh1 billion in 2006, is not registered in the name of the corporation.

Over the past decade, KICC has come to symbolise the rot in State corporations as management and boards loot national resources and leave a legacy where profits from national firms have fallen eightfold while several other companies are in a state of flux or collapsing.

According to the Auditor-General’s reports, KICC bought three vehicles in 2017 for Sh20.8 million but they were registered to Kenyatta International Conference Centre Management Ltd. While these might appear to be the same institution, that is not the case; it was just a simple trick to throw auditors off the scent but the ploy was caught.

“A scrutiny of the logbooks shows that the three vehicles were registered in the name of Kenyatta International Conference Centre Management Ltd and not in the name of the corporation,” the auditor said.

“Although it was explained that the problem rose as a result of a PIN mix-up at the Kenya Revenue Authority, the issue has not been resolved with a view of having the logbooks issued in the name of Kenyatta International Convention Centre,” the auditor said.

Such boldness in State circles has been cultivated over time. Blatant corruption has gone unpunished for so long that those who stole did not bother to conceal their tracks.

At its height, KICC played host to high-profile global events including the 2018 Blue Economy Conference; the 2017 United Nations Conference on Trade and Development (Unctad); the 2016 Tokyo International Conference on Africa's Development (Ticad) VI, and the 2015 World Trade Organisation ministerial conference.

These events thrust Kenya on to the international stage but beneath the glitz, a sinister side worked overtime to make a killing, with so much impunity as though those concerned knew there were no repercussions for their actions.

Between July and September 2015, Sh1.4 billion worth of tenders were handed to cronies without passing through the tender committee.

“Award for 15 tenders (out of 17) was done singly by the then CEO through single sourcing while making reference to non-existent bids for tenders by fictitious companies in total disregard of the tender committee,” the auditor said.

Then chief executive Fred Simiyu was suspended on November 27, 2015, shortly before the WTO ministerial conference in mid-December.

Nana Gecaga, niece of President Kenyatta, was appointed acting CEO in April 2016 before her confirmation to the post in December.

While the board is supposed to offer oversight, the auditor noted that it was directly involved in the flawed process of revising the cost of the design, supply and installation of computerised conference management tender.

Elsewhere, the Kenya Medical Supplies Agency had stocked Sh351 million of expired drugs between 2016 and 2017 while the Geothermal Development Corporation was being sued for Sh3.3 billion for terminating a contract after the Auditor-General cited it for having ridiculously lopsided terms.

“Amongst other clauses, the contract provided for penalties on GDC and, in the event of delays occasioned by its staff, at the rate of Sh50,000 per truck and Sh160,000 per crane each day but, on the other hand if the contractor was to cause the delays, he would only be liable to a penalty of 0.001 per cent of the unit contract price amounting to Sh427,” the auditor's report said.

A review of 15 State corporations shows that in just under five years, profits from the firms have declined from Sh21.2 billion to Sh3.7 billion.

State firms are bleeding from massive losses, forcing the government to dig deeper into taxpayers’ purses to rescue the companies or pay their debts.

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