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ODM wants Kenya Airways' former, current managers probed

BUSINESS
By John Mbadi | Jul 31st 2015 | 6 min read
By John Mbadi | July 31st 2015
BUSINESS
Kenya Airways CEO Mbuvi Ngunze announcing financial results for the year ending March 2015, in which the company made a Sh25.7 billion loss. (Photo:Wilberforce Okwiri/Standard)

NAIROBI, KENYA: As you are all aware, our national carrier the Kenya Airways has run into serious turbulence. KQ declared a record Sh25.7 billion loss yesterday. And as you can see, we fear the worst may be yet to come for KQ. We do not want to contemplate the collapse of Kenya Airways. It must not happen.

At the same time, the auditor general has exposed massive a continuing tale of rot and mismanagement of public finances by the National Government. The Jubilee regime is unable to account for more than Ksh66 billion.

The case of KQ is sad indeed. At the current estimate, the Jomo Kenyatta International airport is a daily turnover of Sh400 million-Sh500 million. This is largely attributed to KQ operations. Should KQ go down, it will go with between 50 to 60 per cent of this turnover not to mention the thousands of jobs. It will also go down with our pride as a nation.

When we look at the rapid descent to this appalling current status of the airline, the indication is that it has not only been gradual but also sustained decline. But Kenyans were never told. And what this tells us is that the management and the auditors have been cooking the books and deceiving both the Kenyan public and the shareholders about the actual financial status of the airline.

Equally worrying is the fact that as the woes of the airline have deepened and its share value has been on a rapid descent at the Nairobi Securities Exchange, one or two Kenyans have been on a buying spree, snapping those falling shares at a rate that betrays some kind of insider information, thus being indicative that there is advance knowledge and preparation for the imminent collapse.

Too many questions need to be answered. Why has every single share of KQ lately been bought by one or two people? Who are these people and why are they so interested in the shares when the company is going down? What is the end game in KQ’s problems?

As we have said, the Sh26 billion loss could not have occurred over night. It points to deeper management problems that covered a long duration, ending with what we were finally told yesterday. But is what we were told yesterday the actual true picture of the airline’s state of account?

The government, as the single largest shareholder, must immediately institute a thorough forensic audit of the airline, using a reputable international audit firm. That firm must also audit the KPMG, which has been auditing the airline’s accounts, and which appears to have been party to the cover up that is now coming out. The National Treasury must equally account to Kenyans.

We need a thorough look into the Strategy and Planning the airline had put in place and why that department was disbanded by either the CEO or both the CEO and the board of Directors. We need to understand why and how an airline like KQ could operate without such a vital department.

In recent years, the airline has been on a route-opening spree. Kenyans need to be told what informed the opening of those routes. For instance, what informed the decision by the airline to fly to Vietnam? Who was doing the route and market analysis?

The airline has been on a spree of buying aircrafts, which looked like a good idea. We now know that it was buying aircrafts, but without routes. It appears all that mattered was the cut some individuals were getting out of every purchase. What we have come to learn is that this plan was used by some individuals in the management and government to cut deals through offshore briefcase companies during the purchase of the aircrafts.

We are now aware that none of the KQ planes are leased directly by the airline. Kenyans must be told the names of the third parties involved in the leasing of the aircrafts and why the airline was not doing this directly. What is KQ paying for engines and airframe leases? Who are we paying? Who do the suspense accounts at Afro Exim bank belong to?

We want to know the names/owners behind the companies like Twiga, Amboseli, Jetspace and Samburu which own the aircrafts Kenya Airways operates? Who gave the guarantees and paid the deposits to the manufactures of the Boeing and Embraer aircraft that KQ delivered? We want to know how many of the KQ planes are currently grounded, sold, underutilized and why? Yet we are paying a guaranteed utilization whether the aircrafts fly or not.

The management of Kenya Airways must explain to Kenyans why the airline has been giving guarantees for aircrafts leased through third parties and how this contributed to the airline’s tickets costing much higher than normal market rates. Example: Kenyans flying to Dubai would rather drive to Mombasa and fly direct on Rwandair at half the price KQ is charging.

We need to be told all the law firms that are involved in the contracts between KQ and those leasing the aircrafts. We need the physical addresses of the firms because we have information some of those firms only exist in foreign countries and islands known for criminal business activities like the ones bringing the airline down.

We demand an investigation of members of the board of Kenya Airways for culpability. We need the minutes of board meetings that approved the business decisions that KQ has taken over the years, including the opening of routes and leasing and purchase of aircrafts. We need a complete disclosure of the assets or lack of the same, by the airline. What does KQ own? Who owns the company that currently owns the ground equipment like the stairs, the tractors, the passenger buses, the cleaners, etc. that KQ is hiring today and that KQ owned once upon a time.

We need a complete disclosure of all the companies doing business with the airline including suppliers of the catering services supplying juices, soda etc? Why didn’t KQ deal direct with manufacturers? Who are the owners of CDL, the staffing company contracted by KQ to employ the airlines ground and cabin crew staff?

Something criminal has gone on at Kenya airways. Somebody must take responsibility and go to jail.

Enough is Enough

We therefore call on the government to secure and protect the servers of the airline and the paper trail of all that has gone on at the company. They must secure the minutes of all board meetings where critical decisions were taken on the operations of the airline.

We want immediate lifestyle audit of all the past and current managers of the airline. This must include what they own locally and abroad. Where necessary, foreign governments must be asked to cooperate and help with the investigation of KQ officials who we are aware own substantial properties in those countries.

Whether it is the inability to account for billions of funds by the National Government the case of KQ, we are dealing with unprecedented cases of impunity and corruption. And we are saying Enough is Enough. We called for action when the Auditor General exposed misuse of funds by county governments. We are calling for action again now on KQ and National Government.

Finally, we appeal to employees of KQ, particularly the pilots, to dig into their reservoirs of patriotism and refuse to be lured into going on strike. The whole loss making operation at KQ appears to have been created to force critical staff into quitting and going on strike as an excuse for a takeover of our airline by corrupt cartels and then covering up.

We appeal to Jubilee regime to stop this scorched earth policy on our country and the raid on our institutions for personal gain.

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