Kenya: Air Afrik to Lay Off 200 Staff, Blames Stanbic on Taking Restructuring Process

11 October 2019

Nairobi — Passenger and cargo carrier Air Afrik is set to reduce its work force in Kenya and South Sudan by 80 per cent in November.

This means that 200 people working in the organisation will be rendered jobless in the company as from next month after the company announced to go through a restructuring process.

The carrier hit major turbulence following the loss of a $20 million plane-leasing contract with the government of South Sudan.

Since the loss of the contract and the court case against Stanbic Bank the company has been reviewing its process; fitting people into the right jobs and in the process, some roles have become redundant.

In a statement, the airline says that they have been forced to declare some positions redundant following some of the issues they faced with Stanbic bank.

"We understand this is a challenging time for our team, but these steps were necessitated following Stanbic Bank's negligent errors, oversight and unlawful actions," the company said in a statement.

According to an official letter to the Central Bank of Kenya, the South African-owned bank admits to having regrettably made an error.

Letters obtained from the Central Bank of Kenya and the Bank of South Sudan to Stanbic Bank questions why Air Afrik should suffer on account of a mistake admitted by the bank.

The bank allegedly withheld crucial information from the company as its customer, with a view to covering its negligent errors, oversights and unlawful actions.

Stanbic Bank also supposedly failed to own up and take responsibility for its own errors and oversights and compensate the plaintiff adequately for the damages and inconveniences suffered.

"This unfortunate situation was created by a severe lack in liquidity at the Company, which resulted from Stanbic Bank failing to act diligently before freezing our funds without a valid court order," the statement reads.

Documents lodged at the Milimani Commercial Courts reveal that Stanbic bank allegedly credited $7.2m down payment to Air Afrik's bank account held in the same bank only to reverse it a few days later.

Air Afrik which has offices In Kenya and South Sudan alleges that the bank deliberately forged the reversal using a fake account dubbed Air Africa instead of Air Afrik in a bid to deceive them.

The company claims that the bank unduly benefited from the funds as they were not reversed to Bank of South Sudan (BSS) despite Stanbic Bank freezing its accounts in February 2016.

Documents from Bank of South Sudan suggest that as of 15th August 2016, that is, six months later, the funds were still not reflecting in their account disowning claims by Stanbic Bank that the funds were reversed. According to the plaintiff, the funds were reversed 14 months' post freezing Air Afrik's account.

The bank has caused huge losses and job cuts to the company which it seeks compensation amounting to $14.4 million. The revelations from the court proceeding raise fresh questions about the bank's risk, control processes and compliance with the Central Bank regulations.

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