Safaricom audit names bosses in graft

Top Safaricom managers have been implicated in alleged multibillion-shilling tendering irregularities at the telecoms giant which last week announced a record Sh38 billion profit for 2015.

The damning dossier by accounting firm KPMG — which is now the subject of a parliamentary investigation — details a review of 23 questionable tenders awarded between September 2013 and August 2015.

The telco hired KPMG to do an in-depth audit of the two-year period following concerns about integrity and value to shareholders.

Safaricom Chief Finance Officer John Tombleson and four other senior executives are named as having influenced the purchase of a Sh1.15 billion five-acre piece of land at Garden City, where the telco plans to build its headquarters.

KPMG auditors also questioned payments of Sh1.2 billion to seven firms for marketing activations that promote the Safaricom brand and its products.

The report also questions the company's procurement of corporate promotional merchandise worth Sh201 million from Vajas Manufacturers Ltd, Chinese technology firm Huawei’s Sh1.25 billion contract to upgrade the M-Pesa platform and payments of Sh1.2 billion to media services company Scanad, which is a subsidiary of WPP Scangroup.

Doubtful deals include South Korean firm Kaon Media’s Sh161 million contract to supply set-top boxes, My 1963 commuter card project with Fibre Space (Sh15 million), purchase of network spares management from GSM Systems (Sh201 million) and a billing system from Huawei (Sh839 million).

Safaricom Chief Executive Officer Bob Collymore has promised to act on the findings of the report having called in KPMG to conduct the audit.

“Action will be taken and uncompromisingly so,” said Mr Collymore at a press conference on May 7, adding that he would not sweep the report under the carpet. “We are not shy of addressing integrity questions.”

PROBE UNDER WAY
On Monday, the CEO said the report was being finalised and promised to make all the recommended improvements to ensure governance systems are enhanced, even as he insisted that there was no evidence of any individuals benefiting inappropriately from the company’s commercial agreements.  

“For the avoidance of doubt, the KPMG’s draft report makes it clear that — while there are internal process improvements required — there is absolutely no evidence that any individuals benefited inappropriately from any of Safaricom’s commercial agreements,” Mr Collymore said.

National Assembly Speaker Justin Muturi on May 5 directed the Departmental Committee on Finance, Planning and Trade to investigate the tender dealings at Safaricom and report back to the House within 60 days.

Safaricom has more recently styled itself as Kenya’s top homegrown brand with advertisements that capture picturesque scenes around the country and its use of the green and white colours of the national flag.

Mr Collymore, who made public his wealth last year, has been championing integrity at the workplace and was a key player in drafting the Anti-Bribery Bill that Parliament recently passed.

The Safaricom CEO is a member of United Nations Global Compact, a group of global corporations that are committed to fighting graft and promoting respect for workers’ rights.

MENTIONED BOSSES

KPMG auditors found that Mr Tombleson had begun talks with private equity firm Actis to buy land at Garden City eight months before Safaricom’s board of directors considered a plan to build an office complex dubbed ‘One City’ project.

“We found correspondence between the finance director, John Tombleson, and Mentor Management CEO James Hoddel, in which they were discussing the possibility of Safaricom acquiring land at the Garden City site several months before the formal process commenced,” says the KPMG report, referring to an email dated August 14, 2013.

Safaricom’s board of directors was first informed of the need to consolidate the company’s operations under one roof on May 12, 2014 and the land finally bought from Actis in July 2015.

Other top executives named in the report are Roy Masamba (Director of Resources), David Kinuu (Head of Human Resource - Shared Services), Vodafone’s Group Property Strategy Manager Richard Muraszko and ex-Vodafone executive Billy Davidson.

Safaricom is 40 per cent owned by British telecoms company Vodafone.