The Ethics and Anti-Corruption Commission (EACC) is investigating alleged misappropriation of funds at Kericho Water and Sanitation Company Limited (Kewasco).
A 2020/21 financial year audit report by the Auditor-General's report shows the company was operating on a negative capital of over Sh122.3 million due to misappropriation and alleged bribery.
The anti-graft agency’s CEO Twalib Mbarak confirmed that the commission was in at advanced stage of the investigation.
“The EACC confirms that it is investigating the matter and upon conclusion, the outcome will inform appropriate action,” said Twalib.
The investigation commenced after a Senate County Public Investment and Special Funds Committee recommended the dismissal of Kibii Siele as the Managing Director (MD) of Kewasco on March 14, 2023.
The committee accused Mr Siele of mismanagement and abuse of office at the company to the point that it has been making losses over the past three years.
Further, the committee called for the sacking of Kewasco board members and the investigation of staff involved in the alleged misappropriation.
Vihiga Senator Godfrey Osotsi urged Kericho Governor Dr Erick Mutai to make changes in the company.
“The county chief should reconstitute the board of the company and the entire workforce if the water utility firm is to be saved from sinking and start to make profits,” said Osotsi.
The governor was also directed to work with the County Assembly and ensure the firm gets a proper legal framework to guide its operations after it emerged that it had been operating without.
Siele defended himself and told the committee that during the takeover of Tililbei Water and Sanitation Company (Tilwasco) in 2018, Kewasco took over both assets and liabilities.
Among the liabilities, according to Siele, included monthly electricity bills, bulk water, and salary harmonisation costs.
He said during the takeover, Tilwasco had a liability of Sh90,565,225, out of which Sh25,073,379 was to be paid by Bomet Water Company as a share of liabilities during the split.
“The balance of Sh65.49 million was to be paid by the County Government of Kericho but the same has not been paid,” said Siele.
His explanation did not sit well with the committee which recommended his sacking. The committee expressed concerns that an audit report showed the company was on the brink of collapse.
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The audit report for the financial year 2020-2021 stated that the company made a loss of Sh10.14 million for the year.
Auditor General Nancy Gathungu stated that the loss resulted in an accumulated negative retained earnings balance of Sh117.22 million as at June 30, 2021.
“The liabilities of the company was Sh346.79 million, exceeding the assets balance of Sh224.48 million, resulting in negative working capital of Sh122.31 million," read the audit report.
Ms Gathungu concluded that the company was unable to meet its financial obligations.
“The challenge raises significant doubt about the company’s ability to continue operating without support from creditors and the county government,” the report stated.
Following the recommendations, the county government of Kericho sent Siele on administrative leave, through a Special Notice dated July 5, 2023, in a bid to restructure the company.
“In order to undertake an independent assessment of the governance and performance of the company, there is a need for the MD to be placed on administrative leave and replaced with Daniel Siele as acting MD,” read the notice.
Aggrieved, Siele moved to court on July 14, 2023, and challenged the decision by the county government to remove him.
The Kericho court ordered that he remain in office until his case is heard and concluded.
The court will give its verdict on September 27, 2023.