22 March 2019

Kenya: Ouko Says Airport Takeover Bid Shrouded in Secrecy

Auditor-General Edward Ouko has cast doubts on the proposed takeover of Jomo Kenyatta International Airport by the struggling national carrier, Kenya Airways (KQ), saying the plan is shrouded in secrecy.

In a report tabled in the National Assembly on Thursday by Majority Whip Bernard Washiali, Mr Ouko says his office was not furnished with crucial documentation on the proposed takeover -- Privately Initiated Investment Proposal (PIIP).

FEASIBILITY STUDY

Although a joint Cabinet memo was prepared on May 29, 2018 on the deal, Mr Ouko notes that there is no evidence that the management and board of Kenya Airports Authority (KAA), which manages all the country's airports and airstrips, was involved in the proposed takeover.

"We have not been presented with a feasibility study which could have informed the joint Cabinet memo meeting," says Mr Ouko.

This came even as Transport Principal Secretary (PS) had stated in a letter of June 19, 2018 that the Cabinet memo was seeking approval on the actions Kenya should take to restore the country's aviation competitiveness and reclaim its position as an anchor economy in Africa, with Nairobi as the African Civil Aviation hub.

The joint Cabinet memo presented by Treasury Cabinet Secretary Henry Rotich was also not available for verification as was the letter from the Head of Public Service, Joseph Kinyua, to the management of KAA and KQ about the plan.

SPECIAL AUDIT

Mr Ouko's report was triggered by the Public Investments Committee (PIC) that stumbled on the proposed takeover as it was considering the financial accounts of KAA.

This forced the committee, chaired by Mvita MP Abdulswamad Shariff, to request the Auditor-General to undertake a special audit of the takeover bid to establish the viability of the deal.

In its preliminary findings, the committee recommended to the House that the takeover bid be stopped until the auditor presents his findings.

This means that PIC will now summon the relevant personalities to find out why relevant documentation was not presented for audit review to establish the motive of the proposed takeover.

"There is no evidence that KAA ever prepared and submitted any proposal to the board. In fact there is no evidence of any intervening exchange by KAA when the Transport PS communicated the decision of the Cabinet until October 18, 2018 when the special board of directors was presented with the information," Mr Ouko says.

But even as Mr Ouko sounded the warning, House Speaker Justin Muturi urged PIC to proceed with its inquiry into the deal and report to the House.

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