The Employment and Labour Court has given Postmaster General Enoch Kinara 10 days to release more than Sh7 million awarded to his forerunner Fred Odhiambo or face civil jail.
Labour Court judge Nzioki wa Makau ordered Dr Kinara to release the award given by the court in 2013 after it ruled that Mr Odhiambo had been unfairly sacked.
Odhiambo was sacked in 2009 by then Minister for Information and Communication Samuel Poghisio for alleged mismanagement.
He sued the corporation and was awarded Sh7.4 million by Justice Nduma Nderi.
Odhiambo was axed after a forensic audit of the corporation's Posta Pay system by Deloitte & Touche. It was estimated that more than Sh20 million per month was unaccounted for since Posta Pay was launched in 2006.
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Odhiambo, who had moved from Barclays Bank, defended himself, saying his performance was impeccable. He claimed the board based its recommendation for his removal from office on the draft report.
Posta Pay was introduced in 2006 but the money transfer system was not making profits.
The court heard that Odhiambo recommended that the person who was then in charge of the system be replaced and that the State close the gaps he had identified.
He claimed that Posta Pay did not have a business plan and the terms with the contractor were high.
The court concluded that he was never given a fair hearing before he was sacked.