Exposé: How the management of Tourism Finance Corporation looted the parastatal

At the Tourism Finance Corporation (TFC) there is a high level of corruption by the current sitting managing director and his cabinet kitchen (HOC & HOL)

The board is bypassed as shown in most decisions.

The source says the attached documents below, that the issue involving Sundowner Lodge Limited versus TFC, is just a sample of the rot at TFC

Misappropriation of Public Resources by the Managing Director. Mr. Orumoi Jonah, Head of Legal Services. Mr. John Karia and Ms. Nora Ratemo. at Tourism Finance Corporation

A: SUNDOWNER LODGE LIMITED VS KENYA TOURISM DEVELOPMENT CORPORATION (KTDC) — H. C. C. C NO. 481 of 2003

1. The Corporation was taken to court by Sundowner Lodge Limited in a court case ref: H.C.C.0 No. 381 of 2003 claiming a total compensation of Kshs. 421.760.000 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.

2. The Corporation engaged the services of Muiru, Mungai & Company Africa Advocates (MMC Africa Advocates) to defend the Corporation in the suit.

3. The Court Case was concluded in July 2014 and Sundowner Lodge Limited was awarded a total damage of Kshs. 30 million instead of Kshs. 421.760.000 as claimed.

4. On 4th July 2014. MMC Africa Advocates submitted to the Corporation legal fees of Kshs. 11.507.085 which was based on the claim pleaded in the plaint of Kshs. 421.760.000 (Evidence 1).

5. In a Letter Ref: TDC/KTDC/001/08 dated on 11th August 2014. the then Head of Legal Servicers, 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 Kshs. 421,760.000 (Evidence 2).

6.MMC Africa Advocates resubmitted its legal to Kshs. 10,710,095 through their letter Ref: DC/KTDC/001/08 dated 15th August 2014. This was further challenged as being high and requested to revise downwards again (Evidence 3).

7. On the 7th November 2014 through their letter Ref: DC/KTDC/001/08. MMC Africa Advocates resubmitted again legal fees of Kshs. 10.362,095 which the Corporation paid and cleared the MMC Africa Advocates legal fees for defending the Corporation on the claimant amount of Kshs. 421,760.000 (Evidence 4).

8. The Corporation decided to appeal against the Kshs. 30 million damage awarded to Sundownder Lodge Limited and engaged the services of MMC Africa Advocates to file the appeal case for the Corporation not to pay Kshs. 30 million.

9. For the appeal to be filed, the Court demanded Kshs. 30.153 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 le January 2015 (Evidence 7(a)).

10. In November 2018. the Corporation won the appeal as the Kshs. 30 million awarded to Sundowner was set aside.

11. On 8’h October 2018, MMC Africa Advocates through their letter Ref: D2/KTDC/001/18-B submitted legal fees of Kshs. 11,142,436 which was based on Kshs. 421,760,000 that had been concluded in 2014 and paid (Evidence 5).

12. 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 through their letter Ref: D2/KTDC/001/18-C dated 16’h October 2018 submitted legal fees invoice of Kshs. 1.797.200 (Evidence 6).

13. The Credit Bank fixed deposit on 9’h October 2018 had grown to Kshs. 41,095,376.04 having earned interest income of Kshs. 10,942.376.04 (Evidence 7).

{See above}

14. MMC Africa Advocates remitted a total of Kshs. 27.526.020 to the Corporation instead of the Kshs. 41,095,376.04 in the Credit Bank Account having retained Kshs.12,939,636 (11.142.436 + 1,797.200) as MMC Africa Advocates expenses (Evidence 8).

15. The following irregularities were committed: (i) The basis for determining the appeal court legal fees of Kshs. 11,142,436 was totally wrong as it amounted to double payment to MMC Africa Advocates as they had been paid Kshs. Kshs. 10.362.095.

(ii) MMC Africa Advocates remitted a total of Kshs. 27,526,020 to the Corporation instead of the Kshs. 41,095.376.04 in the Credit Bank Account having retained Kshs.12,939.636 (11.142.436 + 1.797.200) as MMC Africa Advocates expenses.

(iii) The two legal fees invoices amounting to Kshs.12,939.636 (11,142,436 + 1,797,200) was irregularly retained and withdrawn by MMC Africa Advocates as their expenses.

(iv) The expenses of Kshs. 12.939.636 was not disclosed to the Corporation Finance Department and it is not included in the 2018/19 Financial Statements approved. This understated expenses in the Financial Statements. (v) The interest income earned at the Credit Bank Limited of Kshs. 10.942.376.04 has not been disclosed to Finance Department and was not included in the 2018/19 Financial Statements. hence understating of income declared.

(vi) MMC Africa Advocates invoices did not go through the Corporation’s payment procedures’ in disregard of a well-laid financial policy.

(vii) The money used as fixed deposit was drawn from the loan account and cannot be used to pay operational expenses.

(viii) The payment of Kshs. 1.797,200 for representing the Corporation at the Supreme Court is illegal because the Case is still on-going and advance payment in public sector is illegal. Mr. Karia authorized the MMC to retain as per the correspondences.

(ix) The Corporation therefore cannot account for the Interest Income of Kshs. 10.942.376 earned at the Credit Bank Limited and the legal fees expense of Kshs. 12.939.636 expensed by the MMC Africa Advocates.

16. On 14th January 2015. TFC transferred Kshs. 30.153 million to the joint account of both lawyers at Credit Bank as directed by the Court of Appeal. However, when the Sundowner Lawyers were paid their dues after the Court of Appeal set aside the Kshs. 30 million awarded, the MMC transferred all the remaining money to their accounts. Kshs. 41.095.376.04 on 9th October 2019. This was to facilitate the sharing of the loot.

17. It was illegal for the MMC to transfer TFC money into their private account instead the total money should have been transferred straight to TFC accounts. This was in full knowledge of the Managing Director, Mr. Orumoi.

18. This is purely abuse of public office and misappropriation of public resources by the Managing Director, Mr. Orumoi Jonah and Head of Legal Services, Mr. John Karia who conspired with the MMC Africa Advocates not to remit the entire amounts to the Corporation accounts and failure to adhere to clearly laid down financial procedures on recognizing revenues, interest income and expenses. and legal fees.

19. MMC has been paid double by TFC for this Court case, with the second payments of Kshs. 11,142,436 and Kshs. 1.797.200 being loot shared between TFC officers (Mr. Orumoi and Mr. Karia) and MMC.

20.The Acting Head of Finance (Mr. John Mukuna) can attest to the fact that TFC in May 2015 paid legal fee of Kshs. 10.362.095 to MMC for defending the Corporation in Sundowner court case claim of Kshs. 421 million.

B: ABUSE OF PUBLIC OFFICE BY HEAD OF LEGAL SERVICES. MR. JOHN KARIA

21. 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. Jonan Orumoi because they all come from the same tribe. Maasai.

22.A case in point is that the Kenya National Audit Office has queried Mr. John Karia irregular sitting allowance at Kenya Safari Lodges & Hotels amounting to Kshs. 404,000 (Up to June 2019) not to mention the other four subsidiaries sitting allowance he has been receiving (Evidence 9).

23.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.

24.0n 26th October 2019. Mr. Karia received Kshs. 14.000 (net tax of Kshs. 6.000) 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(Evidence 10).

25.0n 17th January 2020, Mr. Karia received a total of Kshs. 38.200 received (Kshs. 20,000 as sitting allowance and Kshs. 18,200 as night out allowance) when he attended Mt. Elgon Lodge Limited. This is an irregular payment of Kshs. 38.200 as Mr. Karia attended the Board meeting in the capacity of Company Secretary and not a Director of Mt. Elgon Lodge Limited. Even to make matters worse, the amount received by Mr. Karia was inclusive of KRA taxes of Kshs. 6,000. This was contained in a Memo Ref: TFC/INV/12 dated 13th January 2020 that was approved by the Managing Director. Mr. Orumoi knowingly that Mr. Karia in only entitled to a per diem allowance of Kshs. 10.600 per day and not Kshs. 38.200. This was paid from TFC accounts. This is the collusion that is going on at TFC between Mr. Karia and Mr. Orumoi to siphon TFC resources (Evidence 11).

26. In respect to the Golf Hotel, Mr. Karia is paid both the sitting allowance of Kshs. 20,000 and night out allowance of Kshs. 18,200 for attending Golf Hotel Board meetings as Company Secretary for the last 2 years. He should only be paid per diem of Kshs. 10,600 per day.

27.In respect to the Kabarnet Hotel. Mr. Karia is paid both the sitting allowance of Kshs. 20,000 and night out allowance of Kshs. 18.200 from TFC accounts for attending Kabarnet Hotel Board meetings as Company Secretary for the last 2 years. He should only be paid per diem of Kshs. 10,600 per day.

28.Mr. Karia for the last two years has received over Kshs. 1.5 million both as sitting allowance and night out allowance for attending board meetings of subsidiaries as Company Secretary which is highly irregular payments and abuse of public office. Instead he should be paid per diem as it has been the case when he has been taking the TFC Board for project visits or retreats.

29. Evidences 9, 10 and 11 are only samples of the graft going on at TFC with Mr. Orumoi and his fellow maasai Mr. Karia.

C: KENYA NATIONAL AUDIT OFFICE BRIBES BY HEAD CREDIT. MS. NORAH RATEMO

30.A total of Kshs. 646,000 (344.000 + 84,000 + 218,000) was approved by the Managing Director, Mr. Orumoi. as Imprest and taken by the Head of Credit, Ms. Nora Ratemo that was to be used to bribe KNAO Auditors during their visits to TFC projects in three regions Western Circuit (344.000), North Eastern Circuit. (84,000) and Coast Circuit (218.000) in the month of October 2019 (Evidence 12).

31. Ms. Ratemo has never submitted any receipts to account for the imprets taken despite having taken the imprets through the Cash Officer, Mr. Richard Oira.

32.The Managing Director did not question the huge amount of imprets he approved and being taken by Ms. Ratemo because it was a plan agreed between the two that the KNAO auditors need to be bribed.

33.What business does Cash Officer. Mr. Oira has on Credit Department site visits with KNAO Auditors if not to carry the money and be used to distribute to the Auditors. The four auditors in question are Judy, Ebby. Martin and David.

34.The Head of Credit need to explain why she made the Corporation incur SGR cost of Kshs. 18.000 for the KNAO Auditors while travelling to Mombasa.

35. In the month of December 2019. another imprets was approved by Mr. Orumoi and taken by Ms. Ratemo to take KNAO Auditors to TFC subsidiaries which were supposed to have been covered during the October 2019 visits.

• Visited Sunset Hotel in December 2019 which is less than three kilometers from Triple Trojan which was visited in October 2019.

• Visited Golf Hotel in December 2019 which is less than five kilometers from Savona Isle Lodge which was visited in October 2019.

• Visited Mt. Elgon Lodge in December 2019 which is less than twelve kilometers from Westsides Hotel which was visited in October 2019.

36.Ms. Ratemo has never submitted any receipts to account for the imprets taken in December 2019 trip despite having taken the imprets through the Cash Officer, Mr. Richard Oira.

37.This is a waste of resources because these projects would have been done during the October 2019 visits but because TFC is a cash cow for milking, they had to get money for Christmas Holiday.

38. Kenya National Audit Office Auditors are fully financed by the Organization in all their field visits in terms of per diems and travelling expenses.

39.This is the second time the KNAO Auditors are being bribed by the Head of Credit, as during 2017/18 FY, the same tactics was used. Since the same Auditors visited TFC loan projects and subsidiaries in the 2017/18 FY. it was not necessary for them to visit the same projects in 2018/19 FY.

40.Ms. Ratemo has never submitted any receipts to account for the imprets taken in 2017/18 FY trips despite having taken the imprets through the Cash Officer. Mr. Richard Oira. The money has never been returned to TFC accounts.

41. In 2017/18 FY, there was no advance issues brought about by KNAO in respect to Credit Department after the bribery took place.

42.In the three visits TFC has incurred unnecessary expense of over Kshs. 1.2 million in bribe payments to KNAO Auditors.

D: CONCLUSION

43.In summary, a total of over Kshs. 15.64 million of TFC and its subsidiaries public resources has been misappropriated by Mr. Orumoi, Mr. Karia and Ms. Ratemo.

Comments

comments