Senate report raises questions on Kenya Airways boss competence

A parliamentary report has questioned the capability of Kenya Airway's Chief Executive Officer Mbuvi Ngunze and the company's board to run the national carrier.

The report, arising from a Senate investigation, has attributed the financial crisis facing the national carrier to the board members' incompetence.

It has also questioned Mr Ngunze's capability to steer the airline to greater heights, arguing his recruitment to the position was flawed as he did not meet the qualifications as outlined in the Kenya Airways operations manual.

The committee wants the board of management's reconstitution by the major shareholders, which includes restructuring and putting into place a management team with sufficient skills and experience in the aviation industry, with an ability to turn around the company.

It recommended that the airline hires a new marketing director with proven international experience to fix its ticketing system and ensure proper accounting of revenue.

"Infusion of capital can only be made upon meeting the conditions stated above. The committee does not recommend any bailout that does not take into full account the above conditions," read part of the report.

The committee also wants Auditor General Edward Ouko to audit the airline's accounts to ensure that the public funds injected into it are prudently used.

Further, the Senate select committee chaired by Senator Anyang' Nyong'o (Kisumu) wants the board of directors reconstituted. The committee said in the current composition, the management team is over represented undermining the board's advisory role.

The Prof Nyongo-led team criticised the board for using its discretion to waive the requirement for eight to 10 years' experience allowing Ngunze to be recruited.

Committee members, however, argued in their recommendations, that given the airline's importance to the Kenyan economy, the shareholders should inject new capital to facilitate its turnaround.

They also cited overpricing of tickets as a reason that has led to loss of customers to competitors. They also took issue with the company's unsustainable debt levels.

With this mind, the committee outlined three recovery options.

It recommended recapitalisation through a rights issue, bringing on board additional stakeholders or sale of the Government's 29 per cent share.

In the report, the members want Parliament to review the International Finance Corporation (IFC) Act in conjunction with any other relevant international law.

They want the House to establish whether or not the IFC position is tenable, especially as it is currently asking for a position as a Board of Directors member in the airline.

"The committee further recommends a review to the country's engagement with the IFC in view of the fact that they are not accountable to Kenya," read the report.

It added: "The National Treasury should initiate the process of providing a favourable tax regime; possible tax breaks for the Kenya Airways as its success is vital to the realisation of creation of Nairobi aviation hub.