Safaricom-House

Perspective: Who Engineered the Safaricom Audit Attacks? Part One

Analysis

Over the last two week’s the unending conversation has been about the leaked Safaricom report that was being prepared by KPMG. The interest in the matter is not surprising given that Safaricom is not only one of Kenya’s success stories but millions of Kenyans depend on this company.

A lot has been said about the KPMG report which has resulted in Safaricom calling in the Directorate of Criminal Investigations to investigate the leakage. Scangroup also issued a statement explaining the payment from Safaricom that the media has been quoting.

To start off, it is clear that the law was broken on this issue and those who may have interacted with internal audits such as that prepared for Safaricom can attest. Usually, a company like KPMG will include a “Restriction of Report” clause where nothing in the report can be disclosed to a third party. In addition, this clause states that no part of the report may be quoted without prior written consent from the auditing firm.

Did KPMG give consent for bloggers to quote a report that was to help Safaricom self-evaluate? Did KPMG allow the media to use the report as a source of its information even without consulting Safaricom? 

The answer to both questions is NO! The report found itself in the hands of Safaricom and Scangroup competitors who decided to leak it further –  first to bloggers and secondly to the media. 

Transcend Media lost the multi-billion tender to handle Safaricom’s communication and publicity to Scangroup, which is a household name in the industry. Transcend Media which is owned Mike Njeru is thus a possible source of the leak after receiving the report from KPMG, illegally.

It is important to look at Transcend Media and its recent history. Its owner, Mike Njeru, was just this week before the tribunal that is investigating the alleged Sh200 million bribe in the Supreme court. According to the author of the affidavit that triggered the tribunal, Geofrey Kiplagat, the businessman  approached him in order to link Justice Philip Tunoi with Nairobi Governor Evans Kidero. Njeru, while at the tribunal, tried to de-link himself from Kiplagat saying that they had fallen out with the said “whistleblower” way before the bribery issue cropped up.

But this is not the only “scandal” that Njeru and his Transcend Media outfit has been linked to. Last year, the Central Bank of Kenya questioned multi-million payments from the National Youth Service that were made to various companies including Transcend which had received Sh161 million for publicity and rebranding of the force.

In mid-2015, questions again arose over a Sh50 million payment made to the firm for a 5-hour event in Kibra that was attended by President Uhuru Kenyatta in the evening of December 11, 2014. The firm defended the figure saying it was for more than one event. But even more curious had been the capability of the company to get large lucrative deals from government having only been registered in 2013.

Last year, the company sued the Independent Election and Boundaries Commision over a supposed Sh198 million debt. But the courts allowed the IEBC to challenge the payment as the Commission argued it had no contract with Transcend  Media. IEBC’s senior legal officer Moses Kipkogei said in a sworn statement that Transcend had misconstrued that a letter of February 18, 2013 had created a contract with the commission.

The Sh224 million contract to provide advertising and media bookings for the electoral commission in the print and electronic media in the run-up to the elections was supported by UNDP. But at some point, the IEBC asked Transcend to revise the media plan to accomodate concerns raise by the public and political parties on aspects not covered. Transcend went to court claiming that it had incurred expenses that IEBC was declining to pay. IEBC being a public institution is supposed to have all contracts in writing and any spending must be subjected to a competitive procurement process.

But this is not the last of the examples of Mike Njeru’s dealings. Last year, Transcend lost a lig-move logistics deal from Kengen, another public institution. After the tender fell through, an internal audit, similar to what we are seeing with Safaricom, started doing rounds. The coincidence was to clear for any observer and seems similar to what is happening with Safaricom today.

Mike Njeru has been using the leaked KPMG report to claim that his company was rigged out of the Safaricom tender in favour of Scangroup. However, a look at the report shows that the claim that Transcend Media was the most qualified in the evaluation is false. Actually, the frim scored the lowest in virtually all the aspects that were evaluated.

The second company that appears to have an interest in the release of Safaricom’s internal audit is Tetra Radio which owned by Kenneth Kiplagat, a former lawyer of Kenya’s 2nd President Daniel Arap Moi. The two had a long history but appeared to have fallen out after Kiplagat tried to allegedly defraud the former President. The former President went to court in 2005 suing his former lawyer, accusing him of planning to defraud him of Sh101 million. Mzee Moi swore an affidavit saying that Kiplagat was planning to kick him out and seize the ownership of a company -Cherry Hill Limited. Moi added that the said company was actually his and Kiplagat was the lawyer he used to set it up in trust.

So how does Kiplagat come in one this Safaricom issue? It has actually been reported elsewhere, evidenced through a series of emails, that Kiplagat blackmailed the media into publishing stories from the leaked KPMG report. Kiplagat accused the media of being paid by Safaricom CEO Bob Collymore to kill the stories related to the leaked audit report and threatened to expose this through a paid up advert.

What is Kiplagat’s interest in the whole issue? He is one of those persons, though not mentioned, that Safaricom in a paid up advert accused of blackmail. The reason is that Kiplagat has been seeking to be paid for some frequencies that he wanted to sell to Safaricom when the firm won the tender for the police surveillance system. Kiplagat’s firm, Tetra Radio, had bid for the Sh14 billion tender but failed to get it and then started demanding that the government parts with Sh1.3 billion for the frequencies. But after failing to prove in court that he actually owned the frequencies, Kiplagat was forced to surrender them without getting any money. His company thus also falls suspect of leaking the KPMG report after acquiring it illegally in order to force Safaricom to part with some Sh1.5 billion.

In the next installment, we will look deeper into the Safaricom KPMG report and evaluate whether there is a real crisis while looking at action that the company has taken over the last couple of months.

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