Safari Sevens got big payments without contract-Audit

Kenya Airways does not have a contract with organisers of Safari Sevens Rugby Tournament despite pumping monies in the event every year, a forensic investigations report on the tourney has established.PHOTO: COURTESY

Kenya Airways does not have a contract with organisers of Safari Sevens Rugby Tournament despite pumping monies in the event every year, a forensic investigations report on the tourney has established.

The investigation, by Deloitte Consulting Limited handed to KQ board’s Risk and Audit committee on August 5, 2016 says KQ was under no obligation to do anything other than to promote the event.

The probe, which reviewed KQ’s participation in the 2014 and 2015 tournament, Deloitte investigators found that the airline participated in the event by virtue of the sponsorship it has with the Kenya national rugby team and an invitation of Safaricom, the actual event organisers.

In addition, the investigators found that catering, bar handling, branding and card printing expenses of the Safari Sevens events were single-sourced and correct procurement procedures may not have been adhered to.

“We ascertained from consultations conducted with Mr Diaz, Ms Onyach and Ms Kosgei that KQ does not have a contract, and therefore does not have any contractual obligations with the Safari Sevens organising team. This was corroborated from the review of all Safari Sevens expenditures, procurement and marketing documents,” the report says.

Chris Diaz was the Marketing Director of KQ at the time of the investigations while Winnie Onyach was events and sponsorship manager. Rose Kosgei was the procurement officer.

The three-day tourney has been in existence since 1996 when it was first staged by the Rugby Patrons Society. From 1997, EABL (Tusker) took over the sponsorship of the tourney until 2009. Safaricom Limited then took over from 2010.

Currently, the organising committee comprises representatives from Safaricom and the Kenya Rugby Football Union (KRFU). The investigators found that KQ, the sponsor of the national team, is not represented in the organising team and that decisions are conveyed to it through KRFU.

The investigators' review of the two contracts entered between KQ and KRFU on sponsorship of the national Sevens team for 2014 and 2015 ascertained that KQ was only obligated to “promote the team at all appropriate opportunities” including Safari Sevens.

They, however, found that KQ benefited from media exposure the event received, increased air travel ticket sales and sale of KQ branded jerseys and T-shirts worn by the Sevens team.

The investigators also found other transgressions in execution of the tourney.

They found that Purchase Demand Indent (PDI) and Purchase Orders (PO) for the Safari Sevens tournament continued to trickle into KQ after the consumption of the services “in possible contravention of Purchasing Procedures Manual (PPM)”.

“We further concluded that the procurement procedure that led to the appointment of the 2015 suppliers may have been irregular as the KQ employees involved had failed to obtain three quotations as required in terms of the PPM,” a draft report says.

It says there was no competitive bidding process followed for the appointment of KQ suppliers for the 2015 Safari Sevens event and, hence, there is a possibility that KQ may not have had the most favourable procurement outcome based on the circumstances.

 

For example, in 2014, KQ’s purchasing team communicated requests for quotation to three suppliers – Occasions, Extra Dimensions Ltd and OH AFRICA! CO. – and only the first two provided quotations.

Although the PPM required them to obtain “at least three quotations” for consideration, the purchasing team considered the two companies. The following year was even worse as the KQ team only sought quotation from one supplier, Occasions.

Kosgei, the procurement boss, told the investigators that the team settled on the same supplier for two consecutive years because of budgetary constraints.

She also asserted that since they had the same Safari Sevens theme for 2014 and 2015, they opted to use Occasions again in 2015 without following the procedures as laid out in the PPM, the report says.

“A failure to obtain three quotations would be in contravention of the PPM. A lack of compliance with procurement procedures could create opportunities for procurement fraud as the selected suppliers could be related parties and, hence, constitute conflicts of interest,” the report says.

In similar fashion, a company by the name Like Water had been selected to provide bar-handling services at the Safari Sevens events in 2014 and 2015, in breach of PPM provisions in both cases.

“The selection of Like Water Ltd for two successive years did not meet the criteria for single-sourcing,” the investigators said. They said the contract exceeded the Sh50,000 cap for single-sourced services, was not an emergency contract and services sought were not unique.

In the same manner, only two quotations were considered for the supply of invitation cards for the 2014 event. The following year, KQ single-sourced the service from Smart Printers.

In total, Sh1.6 million worth of contracts had gaps in process of award and execution.

"Further, there was no policy in place that specifically governed the Safari Sevens event-related promotional expenses until this year.

"The absence of policy could have created opportunities for the perpetration of irregularities resulting from mis-classification of non-business related costs as promotional expenses, the report warned.

The investigators fingered Diaz, Kosgei, Onyach, Manager Inflight and Fuel Procurement Brian Mbuti and Events and Sponsorship executive Stella Wekesa for the sevens improprieties and recommended that they be subjected to disciplinary action.