Universities lose billions in court battles worsening financial crisis

Graduates at the University of Nairobi. Public universities are reeling under the weight of hefty court settlements. [Elvis Ogina, Standard]

Public universities are reeling under the weight of hefty court settlements awarded over the past three years.

The financial strain adds to existing difficulties faced by these institutions, raising concerns about their ability to function effectively.

An analysis by The Standard reveals dozens of litigations lost by public universities between 2021 and 2023.

The findings paint a worrying picture, with the University of Nairobi incurring the highest losses, totalling Sh2.67 billion.

This includes a staggering Sh1.49 billion awarded to Wathanangu Holdings Limited in a single case.

Other universities facing significant financial hits include Kisii University (Sh631 million), Egerton University (Sh196.4 million), Moi University (Sh131.3 million) and the Technical University of Kenya (Sh80.4 million).

The reasons behind these losses vary from wrongful termination/dismissal, compensation to retrenched staff, and breach of contracts to unpaid debts to suppliers.

The revelations are contained in the 2024/2025 draft budget proposal document available on the Treasury website. 

At Moi University, the institution faced litigations that cost the institution Sh131,264,928 in cases whose verdicts were delivered between 2022 and 2023.

The biggest loss was in January of 2023 when the university lost a breach of contract against Mediheal Hospital & Fertility Centre.

In this case, the university was ordered to pay Sh126,867,110 plus Sh6,312,342 as a settlement to the hospital. According to the document, Moi University has paid Sh62.6 million

In another similar case, the university lost Sh32 million to Shawmut Management Limited for breach of tenancy contract awarded on April 4, last year.

The document also shows that in February of 2023, Moi University lost Sh9 million for breach of contract against Panorama Technical Services Limited.

The university was also ordered to pay Sh999,050 to a part-time lecturer identified as Ann Olal Omondi after losing a case where the lecturer was demanding part of her withheld dues.

In September of 2022, the university was also ordered to pay a settlement of Sh8,757,148 after losing another breach of contract dispute against MFI Documents Solutions Ltd.

While the Technical University of Kenya (TUK) suffered damages amounting to Sh80.4 million from 15 cases listed in the document. The document indicates that the awards were issued between 2021 and 2023.

The biggest litigation loss was in June 2020 between the university and the University and Academic Staff Union (UASU) where TUK  was ordered to pay Sh41.3 million in unpaid union dues; however, the university appealed the decision.

In another case, the university was ordered to pay Sh2.62 million as compensation to two employees who went to court after TUK changed the terms of employment and unlawfully withheld their salary from September 2014 to April 2015.

The two employees were absorbed by TUK having initially been employees of defunct Kenya Polytechnic.

However, the university offered them an appointment to the position of senior technician in February 2014 but later reviewed their roles as part-time lecturers in November of the same year.

However, the court documents indicate that the appointments did not disclose the commensurate package accompanying the said appointments thus they turned down the appointments causing the university to withhold their salaries.

In the ruling, the judge awarded each employee Sh1.3 million and the university in the document indicates this has so far been fully settled.

In February 2023, TUK suffered another legal setback after it was slapped with Sh5 million in damages for dismissing an application of its former employee when it was still referred to as Kenya Polytechnic. The petitioner had sought to be absorbed in an administrative role upon its upgrade to a university.

John Omole Owour argued that he was discriminated against as others were considered for administrative positions.

The university suffered another major loss in September 2021 when it was ordered to pay Sh5.6 million in another case where an employee identified as Narry Philemon Onaya-Odeck took the institution to court for wrongful and unfair termination.

Another blow to the university came in May 2023 after the university was slapped with Sh15 million in damages after 75 students sued the institution for offering an engineering course without accreditation thus rendering their qualifications null and void.

Each student was awarded Sh200,000 compensation in the case. The students stated that between 2009 and 2011 they were admitted at UoN’s School of Engineering to undertake engineering courses.

The university however transferred them to Kenya Polytechnic University College, which was then a constituent college of the University of Nairobi.  

However, in 2013, Kenya Polytechnic was accredited and granted a Charter to become a fully-fledged university known as the Technical University of Kenya the petitioners were consequently absorbed into TUK and they proceeded with their studies subsequently graduating with various engineering degree certificates.

However, upon graduating from TUK, they applied to be registered as engineers with the Engineers Board of Kenya (EBK) but their applications were declined on the basis that TUK was neither accredited nor recognised by the Board to offer engineering degrees.

Egerton University is weighed by damages and compensation amounting to Sh196.4 million.

Among notable cases is a Sh116 million compensation to Diaspora Design Limited in March 2023; this was the highest compensation issued against the institution.

The university was also compelled to pay Sh17 million in compensation to former Vice Chancellor Prof James Tuitoek in a case where the university planned to slash his retirement benefits.

At Kisii University, damages and compensation slapped on the institution amount to Sh630 million.

The biggest compensation against the university was awarded to some 204 former employees who were rendered redundant.

The court in May 2022 awarded former employees Sh625 million.

The university suffered a Sh5 million loss in June of the same year on another judgment entered in favour of a part-time lecture for pending and unpaid teaching claims.

Jaramogi Oginga Odinga University of Science and Technology lost a case where the university’s vehicle hit and killed Daniel Oketch Ouma in October 2018. The family sued for compensation and was awarded.