The Tourism Finance Corporation (TFC) executives are on the spot for colluding with Muiru, Mungai & Company Africa (MMC Africa) executives to fleece the state corporation off millions.
In the centre of the alleged loot is TFC Managing Director Mr Orumoi Jonah and Head of Legal Services Mr John Karia.
Documents in our possession show that in the Corporation was taken to court by Sundowner Lodge Limited claiming a total compensation of Ksh421,760,000 from a claim arising from an offer to issue a financial facility to the plaintiff for the construction of a two star hotel in Nakuru.
The Corporation engaged the services of MMC Africa Advocates to defend the Corporation in the suit. The Court case was concluded in July 2014 and Sundowner Lodge Limited was awarded a total damage of Ksh30 million instead of Ksh421,760,000 as claimed.
On July 4, 2014, MMC Africa advocates submitted to the Corporation legal fees of Ksh11,507,085 which was based on the claim pleaded in the plaint of Ksh421,760,000.
On August 11, 2014, the then Head of Legal Services, Carrey Francis, challenged the legal fees amounts submitted by the MMC Africa Advocates and requested them to revise it based on Advocates Remuneration Order as per the claim of Ksh421,760,000.
MMC Africa Advocates resubmitted its legal to Ksh10,710,095. This was further challenged as being high and requested to revise downwards again.
On November 7, 2014, MMC Africa Advocates resubmitted again legal fees of Ksh10,362,095 which the Corporation paid.
The Corporation decided to appeal against the Ksh30 million damage awarded to Sundownder Lodge Limited and engaged the services of MMC Africa Advocates to file the appeal case for the Corporation.
For the appeal to be filed, the Court demanded Ksh30.153 million to be deposited in a joint account and to be operated by both lawyers and it should interest earning account. The funds were deposited in Credit Bank on January 14, 2015.
In November 2018, the Corporation won the appeal as the Ksh30 million awarded to Sundowner was set aside. On October 8, 2018, MMC Africa Advocates submitted legal fees of Ksh11,142,436 which was based on Ksh421,760,000 that had been concluded in 2014 and paid.
Sundowner Lodge Limited appealed in Supreme Court against the appeal court decision and the Corporation engaged the services of MMC Africa Advocates to defend the Corporation in the Supreme Court. In this respect, MMC Africa Advocates on October 6, 2018 submitted legal fees invoice of Ksh1,797,200 .
The Credit Bank fixed deposit on October 9, 2018 had grown to Ksh41,095,376.04 having earned interest income of Ksh10,942.376.04.
MMC Africa Advocates remitted a total of Ksh27,526,020 to the Corporation instead of the Ksh41,095,376.04 in the Credit Bank Account having retained Ksh12,939,636 (11.142,436 + 1,797,200) as MMC Africa Advocates expenses.
According to a whistle-blower who sought anonymity, the expenses of Ksh12,939,636 was not disclosed to the Corporation Finance Department and it is not included in the 2018/19 Financial Statements approved.
The whistle-blower says that the ‘excess’ amount was shared among the aforementioned officers of TFC and top MMC Africa officials, since it was not accounted for in the two firms.
“This understated expenses in the Financial Statements. The interest income earned at the Credit Bank Limited of Ksh10,942376.04 has not been disclosed to Finance Department and was not included in the 2018/19 Financial Statements, hence understating of income declared,” says the whistle-blower.
He adds that MMC Africa Advocates invoices did not go through the Corporation’s payment procedures in disregard the laid financial policy.
This writer is also made to understand that the Ksh1.7 million paid as legal fees to MMC Africa is illegal, since the case is still ongoing at the Supreme Court.
More revelations show that one Mr John Karia, the Head of Legal Services & Corporation is also Company Secretary to all the TFC five subsidiaries, Kenya Safari Lodges & Hotels, Golf Hotel, Sunset Hotel, Kabarnet Hotel and Mt Elgon Lodge.
“He has been receiving sitting allowance while attending Board meetings for the subsidiaries for the purpose of taking minutes. He is not a director in any of the subsidiary and not entitled to any sitting allowance. He has been assisted to get the sitting allowance from subsidiaries by the Managing Director Mr Jonan Orumoi because they all come from the same tribe, Maasai,” says the whistle-blower.
A case in point is that the Kenya National Audit Office queried Mr John Karia irregular sitting allowance at Kenya Safari Lodges & Hotels amounting to Ksh 404,000 (up to June 2019).
Apart from getting sitting allowance from Kenya Safari Lodges & Hotels, Mr John Karia has also been getting sitting allowances and night out allowances in other TFC subsidiaries where he is the Company Secretary, including Sunset Hotel Limited, Golf Hotel Limited Kakamega, Kabarnet Hotel Limited and Mt Elgon Lodge Limited.
“These are all illegal payments as he is not a Director of these companies but Company Secretary and on TFC payroll as an employee,” adds the whistle-blower.
On October 26, 2019, Mr Karia received Ksh14,000 when attended the Board meeting of Sunset Hotel Limited which was an irregular payment as he attend in the capacity of company secretary and not Sunset Hotel Director.
On January 17, 2020, Mr Karia received a total of Ksh38,200 received (Ksh20,000 as sitting allowance and Ksh18.200 as night out allowance) when he attended Mt Elgon Lodge Limited. This is an irregular payment of Ksh38.200 as Mr Karia attended the Board meeting in the capacity of Company Secretary and not a Director of Mt Elgon Lodge Limited.
Mr Karia in only entitled to a per diem allowance of Ksh10,600 per day and not Ksh38,200 which was paid from TFC accounts.
For the Golf Hotel, Mr Karia is said to have been paid both the sitting allowance of Ksh20,000 and night out allowance of Ksh18.200 for attending Golf Hotel Board meetings as Company Secretary for the last two years.
In the last two years, Mr Karia alone has received over Ksh1.5 million in allowances only.
The state corporation is said to have been bribing auditors to cover up the rot, with the bribes being indicated as imprest.
A total of Ksh646,000 was approved by the Managing Director Mr Orumoi, as imprest that was to be used to bribe Kenya National Audit Office Auditors during their visits to TFC projects in three regions Western Circuit (Ksh344,000), North Eastern Circuit, (Ksh84,000) and Coast Circuit (Ksh218,000) in the month of October 2019.
Receipts for the same have never been submitted to account for the imprest taken.
The Managing Director did not question the huge amount of imprest he approved and from the accounts of TFC.
It is estimated that TFC and its subsidiaries have lost a total of over Ksh15.64 million through the officers.