Posta chairman broke rule with suspensions

By Kenneth Kwama

Contrary to reports in sections of the media yesterday, the move by Postal Corporation of Kenya (PCK) Chairman Cyrus Maina to suspended six top managers of the corporation was not approved by the board.

The corporation’s board did not sit to ratify the suspensions, and other board members, including the Post Master General (PMG) Fred Odhiambo and at least two other members, were also unaware of the decision — allegedly taken to pave way for graft investigation.

The Standard has also established that the suspension order by Maina was based on a draft audit carried out by Deloitte. The chairman, who holds a non-executive position, however, ignored the response by the managers, and suspended them, without waiting for a final audit or board approval.

Under International Financial Reporting Standards (IFRS), organisations that are being audited, like PCK, are required to respond, before the final document is compiled, to allow appropriate response to allegations that could be considered adverse.

Because draft audits are not final documents, the board must await a final audit that will include the response of those accused. That did not happen, raising questions over the legality of the chairman’s actions. The Standard has a copy of the response that says the Sh2.4 million allegedly stolen had been recovered.

Serious loopholes

The draft audit of the corporation’s money transfer service (Postapay), carried out by accounting services firm Deloitte and Touche, poked holes at the system’s efficacy saying it had serious loopholes, which facilitated a Sh2.4 million loss through fraud. Odhiambo, who declined to state whether he was aware of plans to suspend the managers or not dismissed suggestions of graft in the organisation and termed the reports "grossly inaccurate."

"It is true Sh2.4 million was lost, but it was as a result of collusion between two employees. One used to work with us and the other for our partner, Afripayments Kenya Ltd (AKL)," explained Odhiambo.

He said the money was later recovered in full. Although he admits that the money transfer service has challenges, as pointed out in the draft forensic report, he said it was wrong to paint the organisation as riddled with graft because the money that was missing, but later recovered.

"In essence, no money was lost, because we recovered the full amount," says Odhiambo.

In its report, Deloitte says PCK generated revenues of Sh445.4 million and got Sh259.1 million net profit for the 27 month-period under review, but qualification its review that the data’s integrity is impaired and hence can’t be relied upon.

Fraudulent activities

Parts of PCK’s response to the draft forensic audit, which The Standard obtained says that physical documents completed by either senders or recipients can be used to ascertain the existence of transactions or any fraudulent activities, but Deloitte chose to ignore that.

"It is regrettable that the consultants did not find it necessary to request for the documents to test their doubts about the systems integrity. This was a key term of reference for the forensic audit and has not been addressed," states PCK in its response.

Besides PCK’s money transfer, Deloitte’s report also questioned the manner in which it was procured, suggesting it was unprocedural.