New KCC runs into fresh trouble

By John Njiraini and Luke Anami

Just when it seemed like milk processor New KCC was slowly returning to stability after a tumultuous past few months, the company is yet again embroiled in a major controversy that now threatens its long-term survival.

A process to appoint a new chief executive has created major divisions in the company, after it emerged the board had openly flouted procedures in an apparent move to balance political interests.

According to insiders, the company is slowly turning into a battleground between two regions fighting for the position on the basis that they deliver most milk to the company.

Though the divisions have started boiling over to the operations of New KCC, and could hurt its comeback after the recent milk glut, Cooperative PS Seno Nyakenyanya downplayed the magnitude of the unease.

"We know the employees are apprehensive, but we have told them to be positive and stick to their jobs," he said.

But even as Nyakenyanya maintained a brave face, it has emerged that employees are divided into two groups after details of the bungled up recruitment process leaked.

Confidential letters in our possession show that while the New KCC board contracted consulting firm Deloitte to carry out an independent to hire a managing director, it went ahead to influence the process by changing the terms of reference midway.

While originally the board wanted five names from Deloitte, chairman Matu Wamae wrote to the consulting firm asking for six names, before making another late addition of one name.

"Originally we wanted five names from Deloitte but we decided to add two insiders (people working in New KCC)," confirmed Nyakenyanya.

The decision to add the two was based on the understanding that it was not fair to give only outsiders the opportunity to lead the country’s largest milk process when insiders may too be interested.

According to people familiar with the recruitment process, however, the decision to include the two names was arrived at after the board learnt its preferred candidate for the job was not among those short-listed by Deloitte.

The board went ahead to interview the seven, namely Mr Mutisya, Mr Mwiringi, Mr Ouko, Mr Nduguti, Mr Oyatsi, Mr Bartenge and Ms Mugo.

Three names out of the seven (Mr Mwiringi, Mr Ouko and Mr Bartenge) were forwarded to Cooperatives Minister Joe Nyagah who is supposed to appoint one.

However, the Minister is said to be caught between a rock and hard place after ethnicity and politics crept into the process with the two major regions that supply New KCC with milk demanding to have their own fill the position that fell vacant after former MD Francis Mwangi was controversially dismissed.

New KCC collects half of its milk supplies from Central Province and the other half from Rift Valley Province.

Although the company has enjoyed relative stability and steady growth over the past seven years, the sacking of Mwangi coupled by a milk glut early this year has threatened to sink New KCC.

"We fear the board is dragging New KCC to the old bad days in the manner in which they are hiring the new MD," said an employee who came to The Standard offices in desperation.

According to the employee who asked not to be named due to fear of retribution, there has been a breakdown in the chain of command after the names of the three short-listed candidates leaked and it emerged the acting Managing Director Milcah Mugo is not among them.

When contacted, Mugo said operations are running normally but refused to talk about the recruitment process.

"All I can say is that the interviews were conducted but I don’t know anything else," she said.

Efforts to get the Minister were futile, as calls to his mobile phone were not answered.

But even as the Minister, who is the appointing authority, contemplates the next move – he could order the board to repeat the process – there are fears an ambitious stabilisation programme, crafted at the height of the milk glut may not take off.

The company, which recorded loses in the excess of Sh100 million over the past three months, requires close to Sh1 billion to upgrade its old and dilapidated machines to deal with any future upsurge in milk production.

New KCC has a processing capacity of 450,000 litres per day, and is targeting a capacity of 750,000 litres per day after the upgrade.

Besides, the new controversies could delay the company’s forthcoming privatisation. Already, the Government has picked a consortium led by Standard Investment Bank (SIB) to be the advisors for the transaction.

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