The Kenya Copyright Board (Kecobo) has deregistered three music collective management organisations (CMOs) following a dispute on the distribution of Sh114 million to artistes and non-compliance with licensing conditions.
The CMOs are the Kenya Association of Music Producers (Kamp), Performers Rights Society of Kenya (Prisk) and Music Copyright Society of Kenya (MCSK).
"The collection of royalties by these organisations stands suspended until further notice," said Kecobo Executive Director Edward Sigei.
The decision came after Kecobo issued the CMOs show-cause letters over breach of administrative cost limits and the diversion of royalties into an undeclared bank account whose operations are not monitored by Kecobo.
KECOBO Cracks Whip:
The Kenya Copyright Board has deregistered KAMP, MCSK and PRISK; says it has initiated an investigation into what it terms as misappropriation of royalties collected by collective management organisations.#NTVAtOne @OBurrows pic.twitter.com/wsbnJPkS0q
- NTV Kenya (@ntvkenya) August 24, 2021
Mr Sigei explained that the three CMOs also failed to meet the conditions stipulated in the provisional licences set out by Kecobo directors in April this year.
The provisional licences were to remain valid until May 30 subject to meeting conditions such as holding an annual general meeting and allocating 70 per cent of revenues to paying royalties.
The CMOs were also required to engage the Kenya Revenue Authority with a view to reaching a payment plan on tax arrears.
Another condition required the CMOs to demonstrate evidence of marketing and promotion of the use of an ICT collection system, uploading their repertoires to the system under Kecobo supervision and implementing the CMO policy in total.
In issuing the conditions, Kecobo noted that several conditions for the 2020 licence period had not been achieved.
Kecobo set the conditions on the understanding that rights holders (artistes) would rely on the royalties collected by CMOs during the pandemic period.
But in a meeting held on August 11, Kecobo noted that in the recent distribution of royalties, the CMOs reportedly paid Sh41 million (35.9 per cent) instead of Sh79 million (70 per cent) out of Sh114 million collected at the end of July 2021.
Mr Sigei said the distribution formula used by the CMOs defied the Kecobo licence conditions.
"From reports of distribution from two entities received so far, PRISK allocated a further Sh4 million while KAMP made an allocation of Sh1.2 million from their allocation of Sh10 million and Sh8 million, respectively, to cater for administrative costs," he said.
"It should be noted that the distribution excludes money received and expensed in the other accounts out of the Kecobo monitoring system."
Kecobo also received several submissions from rights-holder organisations in response to a public notice placed by Kecobo in print and on social media platforms.
The board, dissatisfied with the CMOs' explanations in response to the show-cause letters, invoked its powers as enshrined in Section 46(9) to 46(12) of the Copyright Act to deregister the organisations.
With the CMOs' licences revoked, the collection of royalties has been suspended for three months or until further notice.
"The main issues flagged by the Board of Directors include the opening of a different account other than the KPM account authorised by Kecobo, having spent more than 65 per cent of the finances on administration cost contrary to directives and not undertaking their role of engaging the public and raising awareness about the KPM system," noted Kecobo chair Mutuma Mathiu.
Kecobo will, in conjunction with relevant ministries, start seeking views on reforming the CMO legal structure to prevent misuse of funds by CMOs.
Mr Sigei said he hopes this process will be completed in three months.