Disturbing details of how Tourism Finance Corporation (TFC) executives have been looting millions from the state owned corporation with the help of Muiru, Mungai & Company Africa (MMC Africa) executives have emerged.
TFC Managing Director Orumoi Jonah and Head of Legal Services John Karia have been mentioned repeatedly on this scandal.
Documents show that the Tourism Finance Corporation was taken to court by Sundowner Lodge Limited to claim upto sh421,760,000 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.
Tourism Finance Corporation then quickly engaged the services of MMC Africa Advocates to defend them in the suit. This particular 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 at the Tourism Finance Corporations, 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 sh30,153, 000 to be deposited in a joint account and be operated by both lawyers and be deposited in interest earning account. The funds were deposited in Credit Bank on January 14, 2015.
In November 2018, the Corporation won the appeal as the sh30 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 sh421,760,000 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 which is illegal since the case is still in supreme court.
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 anonymous source, 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 source further says that the extra 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,” the source was quoted saying.
Adding that MMC Africa Advocates invoices did not go through the Corporation’s payment procedures in disregard the laid financial policy.
It’s shocking that John Karia, the Head of Legal Services & Corporation is also the 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,” revealed the anonymous source.
A case in point is that the Kenya National Audit Office queried 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.
Adding, “These are all illegal payments as he is not a Director of these companies but Company Secretary and on TFC payroll as an employee,”
On October 26, 2019, 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.
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, 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.