KBC Boss Grilled Over Ksh7.5B Loan Acquired From Japanese Lender

Entrance to KBC
A photo of the entrance at the Kenya Broadcasting Corporation (KBC).

The Acting Managing Director of the Kenya Broadcasting Corporation (KBC) Samuel Maina was on Monday placed under scrutiny over a loan facility acquired by the State corporation from a Japanese lender.

While appearing before the National Assembly's Public Investments Committee on Social Services Administration and Agriculture, Maina was asked to explain the circumstances under which the loan was acquired, how it was used and the repayment model.

According to Maina, the loan was used by the national broadcaster to do a facelift and upgrade the station's technologies at a time when the media industry was going through a generation change.

"The loan in question is Ksh7,543,422,121 which was obtained from a Japanese Overseas Economic Co-operation Fund, but KBC is not the one financing the loan," Maina stated.

Kenya Editors Guild Vice President Samuel Maina at the launch of the Guide to Court Reporting in Kenya on September 15, 2020
Kenya Editors Guild Vice President Samuel Maina at the launch of the Guide to Court Reporting in Kenya on September 15, 2020

Maina also revealed that it's the government through the National Treasury that has been servicing the loan over the years on behalf of the corporation.

In return, KBC was supposed to reimburse the National Treasury but the corporation has been unable to repay Ksh2.8 billion which was remitted on their behalf.

In addition, KBC has been unable to remit to Kenya Revenue Authority (KRA) a valued added tax obligation totaling Ksh189.4 million as a result of the losses which they have been recording.

The legislators were told the corporation was found to be in breach of the law and may have to incur penalties. 

The Acting Managing Director blamed the losses on a streak of actions which were taken by the past management before he assumed office. 

However, he assured the legislators that necessary policy frameworks have been put in place to deal with violations, which include embezzlement of public funds at the corporation.

"We lost the money between September 1997 and December 2001 through the use of deficient payroll computer software. Disciplinary action was initiated by the Board and the staff involved were dismissed.

"The issue was further taken to court through external lawyers. We have however invested in new software that has enhanced security that provides scrutiny and history of all transactions", Maina revealed.

The Committee Chaired by the Emmanuel Wangwe (Navakholo) in their report scrutiny, pointed out other financial mismanagement incidents which were committed through various activities carried out by the corporation.

For instance, during the year ended June 30, 2001, the Corporation recorded a net loss of Ksh500 million, and recorded an accumulated deficit of Ksh6.5 billion as of the same date.

During the same financial year, the committee questioned a salary loss of Ksh22.5 million through electronic money transfer fraud.

In his response, Maina told the committee that there was disciplinary action taken against two officers believed to have executed the theft. 

The other issues that the committee sought answers on revolved around procurement procedures, budgetary control and inaccuracies in financial statements.

Maina is expected to submit before the Committee a number of documents to support transactions as raised in the auditor's report.

The committee is also scheduled to hold more sittings with KBC management to finalise all audit queries covering the period between 2001 to 2023.

 A photo of the studios at KBC Nairobi
KBC's TV studio in Nairobi County.