Ex-Kenya Power top executives face fresh audit in latest purge

Engineers from Kenya Power and Lighting company repair electricity near Uhuru Park on October 27, 2021. [Collins Kweyu, Standard]

Ex-Kenya Power senior executives will face fresh scrutiny as the utility firm seeks to reopen previous forensic audits on all financial dealings that have cost it billions of shillings.

The utility firm will in the next Annual General Meeting (AGM), slated for December 3, this year, seek the approval of shareholders to start reviewing past audits.

This is as it widens the purge on shadowy dealings that have crippled the firm. Details of the agenda for the AGM shows the board will also be seeking shareholders’ nod to take legal action against staff and suppliers who may have participated in running down the firm.

“That the board to undertake a review of all forensic and other audit reports with a view to undertaking all necessary legal action … including (on) the past senior executives and other senior persons who have served in management in the firm,” read the AGM agenda in part.

The firm also wants to recover the losses through the seizure of assets of past and current employees who will be found culpable for fraudulent trading with the company.

A review on past audits could rattle former chief executives, including Bernard Ngugi, Ken Tarus and Ben Chumo. It is not clear if the audits will cover the era of long-serving former Kenya Power boss Samuel Gichuru, who is facing extradition charges to the island of Jersey.

Mr Tarus and Chumo had been previously arrested and prosecuted over financial improprieties at the State power utility monopoly.

Kenya Power’s announcement comes barely a week after it suspended 59 members of its procurement unit to pave the way for a forensic audit. This came amid tender fights that have hurt the company’s performance.

The move has been proposed by shareholders holding more than five per cent of Kenya Power’s ordinary shares, meaning that it also has the backing of the National Treasury.

The board is also seeking an amendment to Kenya Power’s internal laws to lift the lid on the owners of electricity suppliers.

In the proposed changes, any company supplying monthly electricity worth Sh1 million to Kenya Power will be compelled to disclose beneficial owners of the supplying firm.

“The suppliers shall expressly permit the company (Kenya Power) to disclose such ultimate beneficial owner in its annual financial reports and or statutory disclosures,” reads the proposal in part.

Tightening procurement laws is seen as one of the ways to return KPLC to stability - having issued three profit warnings in a row before bouncing back into profit.

Mr Ngugi in August this year became the fourth chief executive to exit Kenya Power in four years, amid a boardroom fallout that came months after the court dismissed a petition to remove him over past procurement dealings.

Kenya Power Chairperson Vivienne Yeda had in April said the absence of a robust institutional framework had created a vacuum at the power monopoly which saw it turned into a “veritable procurement machine.”

The comments appeared to indict former Kenya Power bosses, including Ngugi, who was heading the procurement docket when the firm signed a contract with for the supply of transformers, which later on turned out to be faulty.

Ngugi was one of the few senior managers who had remained at the firm after a procurement scandal forced out 10 others, including his predecessor, Tarus.

Mr Tarus and his predecessor, Chumo, were in July 2018 charged alongside other senior managers over abuse of office for allegedly entering into a contract with a company for the supply of transformers, which prosecutors said turned out to be faulty.

Procurement challenges at Kenya Power are far from being over, going by the latest report by Auditor General Nancy Gathungu.

Gathungu said an audit review on Kenya Power IT systems revealed that the monitoring process is weak and poses risks to the firm.

The audit report also revealed Kenya Power had procured consultancy services for civil for supervision of last-mile connectivity project for Sh274.38 million but no consultant was found on-site when the audit team visited.

Further, the project had received Sh28.27 billion but Kenya Power failed to produce any document showing payment of contractors for a project that has connected 213,432 customers against the targeted 525,796.

The State monopoly’s profits hit the peak in 2015 (Sh7.43 billion) before embarking on a fall to post the first loss (Sh939 million) in 17 years in the financial year ended June 2020. Performance has rebounded to Sh1.49 billion profit in the financial year ended June 2021.