MPs probe Moi University's Sh3b bank loan to buy Rivatex

Rivatex company in Eldoret. [File, Standard]

A parliamentary team is investigating how Sh3 billion loan from Exim bank was channeled towards Rivatex company by Moi University.

During the National Assembly’s Public Investments Committee on Education, it emerged that Moi University bought Rivatex textile company for Sh600 million in 2008 and soon, the Treasury secured the loan, for an upgrade.

Amid revelations that Moi University was currently cash-strapped, the committee chaired by Bumula MP Jack Wamboka sought to know how the varsity would be repaying the loan which matures next year.

This was after Moi University Vice Chancellor Isaac Kosgey said they recorded a Sh300 million loss in the last financial year.

“Instead of pumping the Sh3 billion into meeting urgent needs tailored to students, the school chose to buy a company that was not functional? Why? It seems there is more than meets the eye here,” said Wamboka.

The committee further heard that that the university spent Sh30 million to construct the main gate. It was revealed that the gate was initially built at a cost of Sh4.8 million but was later demolished because it was sitting on a road according to guidelines by the Kenya Rural Roads Authority.

Soon, the gate was rebuilt at a cost of Sh25 million. This, Wamboka said, ushered in massive audit queries.

But in his defence, VC Kosgey said they acquired Rivatex as a training centre for textile engineering students and which they would then use for production of fabrics.

“The previous Jubilee administration sought to revive Rivatex and former President Uhuru Kenyatta agreed to connect us to the Exim Bank to buy the equipment. It was a small component,” he stated.

The committee however pressed the VC seeking to know the motivation behind buying the company at Sh3 billion yet only 600 students pursued textile-related courses.

Kosgey said at the time of the purchase, the university was not struggling financially. “We were not bedeviled by liquidity issues when the university made the decision to purchase the textile firm,” he said.

“Up to 2008, we had money and the decision to buy Rivatex was to ensure we had a lab for our students. In 2017, the government came in and we later spent Sh600 million on the purchase,” added the VC.

On whether they would repay the loan, Kosgey said that would depend on availability of raw materials.

The legislators were however perplexed to learn that despite Rivatex having since been delinked from Moi University, the VC sat in the firm’s board. They consequently turned down a request by the VC that Rivatex be audited as a separate entity on the issues before the team.

Kiminini MP Kakai Bisau said it was illogical for the institution - which had been making losses for years - to venture into a loss-making business. “Who is going to repay this loan? Is it Moi University or the company? It was a wrong decision, the government has lost,” he said. 

But Kosgey told the team that high-level engagements with the Ministry of Education, Ministry of Industry (which is currently funding Rivatex) would address the situation.

“As a parastatal, we are holding talks with the ministries to see how we can be compensated for the funds we put in,” he said.