Report: Cartels to blame for woes of machining firm

By Mwaniki Munuhe

NAIROBI, KENYA: A group of business cartels drove a plot to cripple the State-owned Numerical Machining Complex (NMC), The Standard on Sunday can report.

It is understood that the plan was to drive the company into huge losses enough to give the Government sufficient ground to either privatise or even dispose it off by way of selling its assets to interested bidders.

The cartels at the centre of the plot included certain officers then serving within the management structure of the company and business moguls with interests in machining and general engineering in industrial plants’ maintenance and  other high-quality industrial and automotive-related equipment’s and parts busines, which is the core business of the Numerical Machining Complex Limited.

The interest behind crippling of NMC was not only to unscrupulously acquire its assets but to also radically reduce the level of competition it was creating between itself and other private companies with interest in machining and general engineering in the race for lucrative contracts.

NMC is prominent for specialised mechanical engineering services because it uses Computer Numerically Controlled (CNC) technology for high precision machining as well as Computer-Aided Design (CAD).

The National Audit Office investigations into the operations of NMC discovered high level of corruption, open disregard of presidential directives and clear disrespect of the law.

Violations of laws

Some of the yawning irregularities unraveled by the audit report by National Audit Office dated August 13, 2012, a copy of which The Standard on Sunday obtained, include failure to remit taxes, irregular procurement, over-expenditure on personal emoluments, double payments of commuter allowances, lack of motor vehicle record files, irregular payments and violations of the law and presidential directives.

For instance, the report says that although NMC had been allocated Sh102,705,834 in its budget as personal emoluments, the management without any form of explanation went ahead to spend in excess of Sh117 million.

“During the year under review, reads part of the report, “the complex spent Sh117,262,246 on personal emoluments against a budget of Sh102,705,834 thereby overshooting the budget by Sh14,556,412. State Corporations Act CAP 446 requires that no State corporation without the prior written approval of the minister and the Treasury incur any expenditure for which provision has not been made in an annual estimate.”

The irregularities were so glaring that even travel allowance amounting to Sh1,512,000,00 was double-paid to at least to nine senior officers and justified as ‘commuter allowance.’

“It was observed that the introduction of the commuter allowance award to NMC staff was neither budgeted for nor sanctioned by the board, the parent ministry or the Treasury as required. It was further noted that prior to the introduction of the commuter allowance in NMC, a monthly allowance Known as travelling allowance was being paid to nine (9) senior staff at a monthly rate of Sh12,350 per person as a remunerative allowance…the management further awarded the same senior nine officials a commuter allowance of Sh14,000 per person, thereby irregularly raising the transport- related allowances to Sh26,350 per person,” reads part of the audit report. 

Some of the officers whose allowances were irregularly exempted from taxation include the NMC Managing Director George S Onyango, who left two months to the expiry of his term in November 2012.

Speaking to The Standard on Sunday yesterday, Onyango said he could not comment on the report because it came shortly after he had left and that he did not have an opportunity to see it.

“I cannot comment on that matter because the report came after I had left and I have never even seen it,” he said.

National Numerical Machining is chaired by Prof Nick Wanjohi was served as Private Secretary to former President Kibaki.

Visited premises

On Thursday, Industrialisation Cabinet Secretary Aden Mohammed visited the premises of the Numerical Machining Complex but did not immediately announce any drastic action the Government will take to rescue the tax payer-funded complex from the hands of cartels. Numerical Machining Complex was incorporated on January 4 1994 to take over the assets and liabilities of the former Nyayo Motor Corporation.

Even presidential directives were openly disregarded and unspecified amounts of money paid to members of staff without any explanation.

For instance, the report discovered that Office of the President circular number OP/CAB.2/12A of August 14 2006 requiring officers called upon to participate in retreats for special assignments meant to review, develop and produce policy documents be paid Sh2,000 per day was disregarded and the figure raised to a staggering Sh8,000.

“It was observed that members of staff who were called upon to participate in development of the corporation’s strategic plan were paid unspecified allowances of Sh8,000 per person per day contrary to the OP guideline,” reads part of the financial year 2011/2012 audit report.

Acting CEO Christine Mbando said: “Clearly, there was effort to kill this very important institution. Some of the money quoted in the report to have been lost has since been recovered although some figures have been erroneously captured.