Four hotels run by the Kenya Red Cross (KRC) have been placed under receivership over huge debts owed to struggling National Bank that was recently acquired by the Kenya Commercial Bank (KCB).
Kahawa Tungu understands that the four are Red Court, Boma Hotel Nairobi, Boma Inn Nairobi and Boma Inn Eldoret.
P V R Rao, the administrator appointed by the creditors, took over the business on Monday, 16, 2019.
Immediately after taking over, P V R Rao gave notice that the Red Cross Management had been barred from running the business.
“None of the directors, shareholders, employees and no other person is authorised to transact any business on behalf of the company without express written consent from the administrator,” he wrote in a notice.
Red Cross has for many years struggled to paint a picture that the business was doing well with reports indicating that the management at some time tried to manipulate books of accounts just to show that their fortunes were not dwindling.
KRC directors had indicated that the business was at the verge of failing due to huge debts and losses the business.
Despite KRC pumping over 800 million in three years to save the business, the investment was wiped out by losses.
Liabilities, the directors pointed out, were soaring at a much faster rate than asset accumulation, suggesting that the business was a bad idea after all.
This can greatly be attributed to the fact that KRC relies on goodwill.
Besides Boma hotel financial crisis, Switch TV owned by KRC is also said to be on its death bed.
The struggling station that is threatening to leave the organization bankrupt last week laid off its eight staff days to the expiry of their contracts.
In July, the station let go of 30 employees due to an already bloated staff. The station allegedly only brought in Sh5 million in advertisements.
Many Kenyans have in the recent past accused Kenya Red Cross of diverting funds meant to alleviate suffering during tragedies to the construction of some of the KRC hotels.
“There was no due diligence in the construction of this hotel, worse still, the money was not meant for such activities. The money was meant for Kenyans”, a KRC official who sought anonymity intimated to a local news outlet.
Outgoing KRC Secretary General Abbas Gullet has in the past been accused of lack of accountability.
In fact, this year, Kenyans vowed not to contribute a coin after Gullet requested that Kenyans donate Ksh824 million for hunger victims in 12 counties affected by famine in the Eastern and North Eastern Counties.
Most stated that the money that was raised in 2011 during Kenyans for Kenya campaign went to a few individual’s pockets.
National Assembly Majority leader Aden Duale stated that the national government gave the Kenya Red Cross Ksh1 billion to construct houses for flood victims in Budalangi, Tana River, Garissa and Meru during last year’s floods but to date none of the projects has seen the light of day.
Instead of burdening Kenyans with Pay Bills, the majority leader called on the government to investigate how Red Cross spent the Ksh1 billion.