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Rift Valley Railways top brass accused of fraud in rail deal row

By Dominic Wabala | Published Thu, September 14th 2017 at 00:00, Updated September 13th 2017 at 23:06 GMT +3
Kenya Railways Managing Director Atanas Maina

In summary

  • Kenya Railways has threatened court action, claiming a firm has been collecting revenue for services it did not render after termination of a concession
  • Company CEO and HR manager have since resigned in wake of fallout

Kenya Railways has threatened to initiate criminal proceedings against top managers of Rift Valley Railways (RVR) for alleged fraud.

The development, it has emerged, came shortly after RVR Kenya Group Chief Executive Isaiah Okoth and Human Resource Manager Mary Kita announced their resignation last week.

Kenya Railways said RVR Kenya and its Ugandan subsidiary had continued to collect money from customers even after the termination of its concession to run the old metre gauge railway last month.

In a letter to Mr Okoth dated September 11 and copied to Transport and Infrastructure Cabinet Secretary James Macharia, Kenya Railways Managing Director Atanas Maina has demanded the firm hand over revenue generated after termination of the concession agreement or face legal action.

“Please be advised that we are still waiting to receive from yourselves a statement of account touching on services rendered in the month of August 2017, including details of the customers to enable us to collect the monies owed,” said Mr Maina in the letter seen by The Standard.

“Further, we have information that some customers may have paid out monies to yourselves or RVR Uganda under the guise that services were rendered by RVR Kenya. Should this be the case, we expect a full account of the same and remittance of all sums to our bank account whose details you already have.”

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Internal memo

Last week, Okoth claimed Kenya Railways had mandated RVR to operate freight services on its behalf from August 1, with payments being made to the former’s accounts.

He said it was from this arrangement that RVR had demanded that Kenya Railways should settle August salaries for staff and community-based groups that rendered line maintenance services over the period.

“From our discussions on the above matter and your aforesaid letters, you acknowledged that the operation of freight services as from August 1, 2017, was by RVRK staff on your behalf.

"Furthermore, you instructed customers to pay all receivables for loadings after August 1 to your account,” said Okoth in the letter dated September 8 on behalf of the RVR board, the same day he allegedly resigned from the firm.

“This is to inform you that my role as Group Chief Executive Officer in RVRK, RVRU, EARHK and EARHU ceased on Friday, September 8, 2017.

"Please be advised that all outstanding matters that require the GCEO’s attention including those related to Ex-RVRK, RVRU and EARH staff should be referred to Bong Yoon (RVRK) or Vincent Tshiongo (RVRU),” said Okoth in an internal memo.

The High Court last month ordered RVR to transfer its employees and assets to Kenya Railways within 30 days following the termination of its 25-year-old concession to run the 100-year-old metre gauge railway.

A tussle has however erupted as to who is responsible for the RVR employees. Kenya Railways has disowned them.

Revenue collection

The stand-off over revenue collection following termination of the concession deal comes hot on the heels of revelations by Transport Principal Secretary Paul Maringa last week that RVR had been diverting billions of shillings loaned to it over the 11 years it operated the old railway line.

The century-old line has been rendered obsolete by the completion and commissioning of the Standard Gauge Railway.

Termination of the railway concession marked the biggest failure of a private-public partnership venture in the country.

The RVR failed to make any major investments as expected, leading Kenya Railways to issue a termination notice shortly after the launch of the modern SGR in June.

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