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Asset Leasing Firm RentCo’s Questionable Deals With State, KenGen, Uchumi Running Into Billions

rentco, kengen, uchumi
RentCo East Africa CEO Robert Nyasimi (Left) with Riara University University Vice-Chancellor, Prof. Robert Gateru (Right). [Courtesy]

RentCo East Africa, one of Kenya’s largest asset leasing companies has over the years inked deals with the government, Uchumi and KenGen since its incorporation on June 6, 2012.

The asset leasing firm is on the spot for a back to back lease agreement with the government through motor vehicle dealers. The deal inked in 2016 saw the firm enter into Sh10 billion agreement.

Sources who spoke to Kahawa Tungu on condition of anonymity said the firm entered into deals with Ford, Subaru and Peugeot dealers but could not afford to buy the vehicles from the manufacturers.

In order to finance the deal, the firm management took loans from Cooperative Bank and Kenya Commercial Bank (KCB) to finance the vehicles beating established companies like
VAELL and Rentworks.

This was made possible by paying bankers and the motor dealers kickbacks.

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The Government vehicle lease program was launched in 2013 and was supposed to deliver at least 10,000 vehicles. The vehicles were going to be distributed to the various government agencies with the majority going to the national police.

On RentCo’s payroll was an individual identified as Jaindi Mitoko Kisero who received a sum of Sh420,000 on separate dates.

Jaindi was supposed to stop the publication of damaging stories against the firm. On December 18, 2015 they received a Sh159,000 check from Coop Bank (No 00144).

Again, on October 21, 2016 they received a Sh240,000 check from NIC Bank (No 00909). The payment voucher read “Down payment in respect of advisory contract).

These payments were pre-approved by CEO Robert Nyasimi via email correspondence.

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Again, the vehicle leasing firm was involved with cash strapped Uchumi where they financed the Sale and Rentback product. In this case, the retailer which is now knee-deep in debts sold their fixed assets to RentCo and in turn, it would lease the same asset from them.

The supermarket was supposed to get good working capital injection but the management would later find out that they had been ripped off, the source details.

The first Sale and Rentback tranche of Sh500 million was financed by Coop bank, the second facility of Sh1.1 billion was financed by KCB.

The KCB loan, Kahawa Tungu learnt had not been approved by the board. RentCo then helped the then Uchumi management forge a directors’ resolution authorizing the borrowing.

The board resolution presented for the draw-down was on two pages, page 1 was the alleged minutes and page 2 was the signatures. The second page had been plucked from another document signed by Uchumi directors. In addition, the two pages were of different
texture and size.

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Uchumi management received Sh7 million in order for them to push the deal forward.

We also understand that a KCB Relationship Manager Gideon Kihagi was paid some Sh500,000
through a Coop Account on October 13, 2015 check No 00088.

Earlier this year Kipng’eno Rutto, RentCo’s Chief Executive left the company under unclear circumstances. Word has it that he is headed to Uchumi, in an elaborate plan to cover up the fraud.

He has been replaced by a Mr Mohamed who came in as the firm’s Chief Financial Officer (CFO).

We also understand that Rutto is the son of a senior politician.

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In 2014 Kenya Electricity Generating Company (KenGen) invited companies to an Expression Of Interest (EOI) for leasing of 50MW geothermal wellheads for Ol Karia V plant.One of the conditions was 3 year audited financials.

Then, Rentco had only been in business for just over a year and could not satisfy this condition. The firm’s management went ahead and forged their certificate of incorporation and also the 3
year Audited Accounts.

They proceeded to the tendering stage and beat veterans in the geothermal industry like Transcentury and Marubeni.  In the tender submission, they used the same forged certificate of incorporation and 3 years audited accounts.

But RentCo had an upper hand as they had an inside man, Ean Kibet Ronoh who is also a silent director at Rentco. He was in the tendering committee and was able to advise Rentco on what the
the committee was looking for and vouch for them.

Our source who is privy to the goings-on said that Ronoh was on various occasions paid by Rentco and also his trips were catered for. A greedy Ronoh would later claim per diems from his employer.

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With his help, RentCo was awarded a Sh52 billion tender that would later be challenged by another bidder—Russia’s OSJC Power Machines—which claimed RentCo used forged documents to make it appear qualified for the deal.

The matter is still in court even after KenGen admitted to not having scrutinized some companies that were gunning for the tender.

The cancellation was done on November 9, 2015 and the firm notified in writing in February 25, 2016.

The Public Procurement Administrative and Review Board (PPARB) in March,2016, however, ordered KenGen to reopen the tender and award it to RentCo.

The PPARB’s ruling followed an appeal by RentCo filed before it in March 2016. But in a December 2016 ruling, Justice George Odunga quashed the decision by the public procurement appeals body compelling KenGen to award the firm the contentious tender.

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“In my view, if RentCo intended to challenge the decision terminating the tender, it had to do so within seven days of November 9, 2015 and not February 25, 2016 which only drew RentCo’s attention to the earlier decision. It is therefore clear that the PPARB simply had no jurisdiction to entertain the request for review in light of the statutory limitation.”

“I grant an order removing into this court and quashing the decision of the PPARB dated March 24, 2016,” Justice Odunga ruled.

RentCo had a month before winning the Sh52 billion tender been disqualified from participating in a separate contract for presenting forged documents and irregular financial statements.

Kahawa Tungu also understands that Ronoh drives a Range Rover registered in the name of Rentco CEO Mr Nyasimi. Should the court rule in its favour, Ronoh will spearhead the project.

The leasing company has over the years been accused of tax fraud.

For instance, on September 21, 2015, the taxman wrote to the company demanding that they settle Sh40,983,557.12 for the period between July 1, 2015 to July 31, 2015 by August 28, 2015.

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“Kindly pay your tax within next 30 days ending on 21/10/2015, failure to which will attract penalty/interest. Also, please find attached the copy of payment defaulter notice. Please consult North of Nairobi Tax Office for any queries,” the letter from the commissioner read.

A source intimated that RentCo then paid Sh20,000 for a tax compliance to be facilitated.

 

RentCo in September inked a Sh180 million leasing deal with the Laikipia County for road graders and tipper trucks.

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Written by Kahawa Tungu

Email: news@kahawatungu.com

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