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How AA of Kenya Management Has Been Orchestrating Privatisation Deal

AA of Kenya

Vehicles at the AA of Kenya yard in Embakasi. [PHOTO/ COURTESY]

Founded in 1919, the Automobile Association of Kenya (AA of Kenya) has grown to over 100,000 members in the country, becoming the biggest motorist association in the country.

AA, as it is famously known, was started with the aim of promoting and safeguarding the interests of motorists, providing information and advice about the purchase, maintenance and repair of vehicles, negotiating attractive insurance premiums, road mapping and the setting up of petrol depots.

Along the way, the association has built arguably the best driving schools in Kenya, preferred by most organisations that want to train their drivers.

However, Kahawa Tungu has laernt that the association is facing turbulence, as the current management looks to privatize the institution.

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First, the plot has been to push out older employees who know the ways in which the institution runs, to reduce any resistance that could develop.

According to documents in our possession, tens of employees who have worked for the institution for over ten years at the management level have been pushed out, with their exit disguised as resignation.

The “resignations” started in 2010, but a good number of employees seen as threats to the management were pushed out in 2018 and 2019.

The head of marketing Joseph Kariuki was forced to resign on December 23, 2010, months after the corporate business executive Mr Wallis Gacharia Wahome was pushed out on July 12, 2010.

The head of the Human Resource Department, who knew almost every worker in the institution, Ms Catherine Wachu was pushed out on November 6, 2017, after being used to process the “resignations”. She had served AA of Kenya for 16 years, and her place was taken by Linda Kenelwa.

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On February 7, 2018, exactly three months after Ms Wachu’s exit, the valuation officer who had served AA for 28 years tendered his resignation. He was followed seven days later by Robert Kuria on February 14, 2018. Mr Kuria was the head of IT and had served in the department for 23 years.

Seemingly, Mr Kuria’s assistant Titus Wachira knew too much, and Kahawa Tungu learns that he was pushed out almost a year later on January 3, 2019, after serving the company for eight years.

All the above exits among others were forced in the disguise of resignations which were accepted almost immediately by the management. As a way of appreciation, the “exit perks” were organised almost immediately.

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In 2018 alone, AA borrowed Ksh50 million to pay retrenched workers and thereafter hired new employees.

Further, this writer learns that the names of the officers who were forced to resign were removed from the register of live members, even as the plot to privatise the institution gained momentum.

Receipts in our possession show that the officers’ names were returned to the register in August 2020, after an AGM that ratified the privatisation.

Letters in our possession revealed that the names were expunged from the register after purportedly raising complaints about the organisation’s management. Later, some of the members denounced the complaints.

“I refer to a telephone conversion from the AA Membership Department indicating that there was a complaint lodged under my membership number, and that my membership had been canceled.
I wish to confirm that I am satisfied with AA Services, and that my membership has not under any circumstances been canceled,” wrote Robert Kariuki in a later dated August 13, 2020.

Among those who had to member themselves afresh include Wallis Gacharia and James Kimani Riungu.

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In the saga, the CEO Francis Theuri claimed that the team ceased to be members after failing to pay their yearly subscriptions. However, the Association’s Constitution allowed registered members to remain members without even paying yearly subscription fees, only that they would not be allowed to vote during AGMs.

He claimed that the clauses were changed, a move that seems to have been technically orchestrated to lock out a number of members.

As the membership saga was ongoing, a plot was underway to hold a fraudulent election, a move that would ease the process of privatisation after the “troublesome” members were expelled.

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The AGM was set to be held virtually on August 7, 2020, and the contract to facilitate the same was awarded to Lawrence Kibet’s Image Registrars Ltd at a cost of Ksh710,000. At least 531 members (out of over 100,000 members) were registered to participate in the AGM, with the disgruntled one left out according to a register provided by Image Registrars on August 4, 2020.

In the AGM, one of the agenda was to demutualize in accordance with rule 15.3 of the Association’s Constitution.

Demutualization especially in societies means a change (of an entity) from being owned by its members to a different kind of ownership. In this context, the business wing of AA of Kenya would be privatised, to fulfill the desire of the management led by CEO Francis Theuri and the governing council.

“At any time during the life of the Association, the members of the Association may, on recommendation by, the Governing Council resolve to demutualize tinder such terms as the members shall decide,” reads part 15.3 of AA’s Constitution.

The notice of the AGM was announced on July 7, 2020, but the contents (agenda) of the AGM was allegedly changed in the subsequent notice on July 22, 2020.

“In accordance with clause 15.3 of the Constitution and Rules of the Automobile Association of Kenya, the Association be and is hereby demutualised. AA of Kenya to issue shares to its members on a Private Offer basis. This means that subject to regulatory approvals, AA of Kenya will issue and sell shares to the members of the Association. The capital raised will be used for the strategic growth and expansion of the organisation,” read the notice of July 22, 2020.

This, according to disgruntled members who have already gone to court, was in violation of the Constitution which requires a 30-day notice for new agenda. Members allowed to vote during the AGM were limited to 100, according to court documents.

“The candidates for the upcoming election for members of the Governing Council have also been limited to 100 ballots each which means that many voters willing to participate in the exercise will not have a chance to elect their preferred leaders,” the members said in court documents in a case that they sought to stop the AGM.

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With limited votes and hitches in the online voting process, this meant that the Association would have predetermined elections where only members supporting demutualization would be elected to the governing council (GC).

As a result, one of the contestants, Mr David Waweru, pulled out of the race on July 21, 2020, also citing threats from unknown persons.

“I have today received two telephone calls from anonymous people asking me all manner of things and I have interpreted this to be oblique threats because of some issues I have raised. It really does not need to come to this. For the reasons stated above I wish to inform you that effective from today, I have resigned my position as both Treasurer and GC Member of AAK. Consequently, I have relinquished my positions as a member of the Finance and Strategy Committee, Trustee and Chairman of AAK Pension Scheme and as a Director of AA Insurance Brokers Ltd,” said Waweru.

His place was taken over by Jonathan Bett.

The election of preferred members to the GC meant that certain rot in the Association would never come out, but thanks to Kahawa Tungu‘s investigative desk the truth will be told.

First, despite having increased income in the last two years, AA was overborrowing as a result of over-expenditure and fraudulent business deals.

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First, the Association was leasing vehicles from certain GC members, who were pocketing big amounts of money. An inside source intimates that another GC member bought a vehicle from AA, and also leased it back getting returns immediately.

At least five GC members are said to have been schoolmates, occupying positions strategically to ensure that no rot is leaked.

Many issues regarding the elections, conflict of interest and integrity of the GC were raised in the GC’s WhatsApp group, which were ignored by Mr Theuri. In fact, Mr Waweru was removed from the group by Mr Theuri, as per the conversation copies in our possession.

Those elected to the GC include Jinaro K. Kibet (President), Samuel N. Gachoka Vice-President), Erastus K. Mwongera (secretary), Aggrey Jonathan Bett (treasurer) and Francis Theuri (CEO).

Ordinary members include Samuel Waweru, Charles Waithima, Gerald Kariuki Gakima, Stephen Maina Waweru, Beatrice Atieno Rariewa, Dr. Manoj Shah, Rev. Harun N. Ngere, Julius Ngugi and Samuel Kamau

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email

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