The anti-graft agency now wants former National Treasury Cabinet Secretary Ukur Yatani, his former Tourism counterpart Najib Babala and the Controller of Budget Margaret Nyakang’o charged over corruption allegations.
Mr Yatani, ex Treasury Principal Secretary (PS) Julius Muia and Dr Nyakang’o are in trouble over the Sh6 billion Telkom acquisition.
Mr Balala and his former PS, on the other hand, are to be charged over allegations that the Tourism Fund fraudulently paid Sh8.5 billion to set up the Coast Branch of Kenya Utalii College (later renamed Ronald Ngala Utalii College).
“It was reported that the Tourism Fund managers inflated the cost of setting up the college to Sh10.4 billion against the initial cost of Sh1.95 billion,” read the quarter three report by the Ethics and Anti-Corruption Commission (EACC).
EACC established that not the whole amounts paid to the firms were legitimate, as (the firms) had been overpaid to a total of Sh1, 483, 460,914.97.
In the Sh6 billion Telkom buy-back deal, EACC wants Yatani, Muia and Nyakang’o charged with 11 counts of offences, including money laundering.
The commission has also recommended to the Director of Public Prosecution (DPP) Renson Mulele Ingonga to charge Muia with similar counts of offences.
Others targeted for prosecution are Telkom Kenya chief executive officer Mugo Kabati, chief finance officer Allan Wainaina, chief operating officer Kosi Ali, chief strategy and business development officer Julius Cheptiony.
A report to charge the officials was compiled and forwarded to Mr Ingonga on August 29, 2023.
He is, however, yet to act on the recommendations by the EACC.
The recommendations to charge Ms Nyakang’o adds to her current woes after she was charged with three counts of fraud, operating a Sacco without a license and forgery.
She has since got a reprieve after the High Court issued an order suspending her prosecution following a petition.
Retired President Uhuru Kenyatta’s administration acquired a 60 percent stake in Telkom Kenya at Sh6 billion in a controversial deal executed in the run up to the 2022 General Election.
“…report was compiled and forwarded to the DPP with recommendations to charge the former CS for the National Treasury, the former PS at the National Treasury, the Controller of Budget, former Director General Public Investments and Portfolio Management, Chief Executive Officer at Telkom Kenya Limited, Chairman of the Telkom Kenya Limited Board, Chief Operating Officer, Chief Strategy and Business Development Officer and Chief Finance Officer at Telkom Kenya Limited and a transaction advisor for Helios be charged,” stated the report.
The details are contained in EACC’s third quarterly report covering July to September 2023 and signed by its CEO Twalib Mbarak and chairperson David Oginde.
The agency commenced a probe into the alleged irregular acquisition of Telkom Kenya shares by the government from Helios Investors LLP at a cost of Sh6 billion following a complaint from the Clerk of the National Assembly Samuel Njoroge on March 6, 2023.
Investigations, EACC said, established that the search for potential investors stopped when Mr Yatani wrote a letter dated March 29, 2022, communicating the government's acceptance of Jamhuri Holdings Limited (JHL) decision to exit Telkom.
Documents presented before Parliament previously cite frustrations by the Government of Kenya as the reason Helios Investors LLP/JHL exited from Telkom Kenya in a process that started on April 1, 2022, and culminated in September 2022.
“Investigations further established that the Communications Authority of Kenya (CAK) did not grant approval for acquisition of 60 percent shares of Telkom Ltd by the government in the transaction under inquiry since part of the conditions given by the Authority were not met by Telkom Kenya Ltd,” the report says.
It further reveals that former Attorney General Paul Kihara did not issue his opinion despite the existence of correspondence between Mr Yatani and Mr Kihara.
“Investigations revealed that despite the correspondence between the former Attorney General and the former CS National Treasury, the office of the AG did not issue legal opinion, neither were the AG’s comments and advice incorporated in the contractual documents,” says the report.
EACC also established that the acquisition of shares by the State from JHL did not meet the threshold as provided in Regulation 40 (3) and 4 (3) and 4 (a) of the Public Finance Management (National Government) Regulations, 2015.
EACC said the transaction was ‘not unforeseen and unavoidable’ therefore failed to meet the set threshold.
In 2007, the government made a decision to privatise the Telco by selling 51 percent of its shares to Orange East Africa (OrEA) Limited, a subsidiary of France Telkom SA (FT), a move that was undertaken to turn around its performance and “put it on a path of profitability.”
But Telkom Kenya continued to perform poorly. It failed to generate sufficient revenue to cover even its operating costs, let alone the repayment amounts for the loans extended to it by the shareholders; the Government of Kenya and OrEA.
It was technically insolvent and the shareholders had two options — either to restructure its balance sheet or to voluntarily liquidate it.
In 2012, the shareholders chose to restructure the telco’s balance sheet, which was carrying debts to the shareholders of Sh50.9 billion — Sh44 billion owed to OrEA and Sh6.9 billion to the State.
OrEA wrote off Sh33.5 billion and converted the balance of Sh10.5 billion into equity with the government converting the Sh6.9 billion debt into equity
Apart from the money laundering offence, EACC wants the officials charged with conspiracy to commit an offence of economic crime, fifteen counts of abuse of office and two alternate counts of willful failure to comply with the law relating to the management of funds, conflict of interest, among others.
