State could pay creditors of grounded Nyayo Bus millions

The ghosts of the collapsed Nyayo Bus are back to haunt the government. This comes 18 years since the Kanu-era transport firm was grounded.

The High Court has ordered the official receiver to take stock of all claims that the company has not paid within a month.

The order could see government pay millions.

High Court Judge Erick Ogola has directed the official receiver to call for a meeting, through an advert within 30 days, of all creditors of Nyayo Bus Service Corporation. The forum will allow them to officially make their claims.

The government will fund the meeting and pay genuine debts, the judge said.

“The said meeting shall take place in the offices of the official receiver,” notes Mr Justice Ogola.

GENESIS OF DISPUTE

The list of creditors who will attend the meeting will be availed in court on a date to be agreed on by the parties.

“The official receiver shall source the funds for the said advertisement within the offices of the Attorney-General, failure whereof the Office of the President,” Judge Ogola said.

The dispute emanates from a winding-up order issued against Nyayo Bus Service on May 5, 1997. Since then, it is alleged that the official receiver has never briefed the court on the status of the corporation.

However, following a demand by one of the creditors who said the business wound up before their claims were settled, the official receiver filed a report on the  status of the firm’s liquidation on October 9, last year.

Mr Justice Ogola ruled that the receiver’s report had gaps and omissions, which “automatically renders it incomplete.”

The court said the report did not show whether or not there was a “settlement list of creditors” as required by law. There was also no indication whether the official liquidator took custody of Nyayo Bus assets after its collapse.

“There is no indication whether public examination of the corporation’s officials was undertaken. There are no audited reports for the over 17 years the liquidation has been ongoing,” Mr Justice Ogola said.

In addition, there are no periodic reports given to the court, since the  winding-up  order was issued.

The Judge said it also appears that “some creditors have been paid through the Office of the President in the process, which is not made clear to some of the creditors.”

The Judge said given the circumstances, “the only sensible thing to do is to require the official receiver to do the right thing, and to start the entire process afresh, if need be.”

BRIGHT FUTURE

Nyayo Bus Service was established in 1986 to provide affordable transport to Kenyans and compete with the Kenya Bus Services, a company ran by the City Council of Nairobi.

The buses, donated by the Dutch government, were initially meant to transport National Youth Service personnel. In 1988, the youth service operated a fleet of 89 buses, which included Isuzu, Leyland, and DAF brands.

The company apparently had a bright future given its rapid growth.  When the public transporter became too big for the National Youth Service to manage, the government set up the Nyayo Bus Service Corporation.

The new parastatal received more buses from the Italian, Dutch, and Belgian governments expanding its fleet to more than 300.

Some of the areas the buses operated in are Nairobi, Mombasa, Nakuru and Eldoret.

However, lack of expertise in managing public transport and stiff competition from other bus companies drove Nyayo Bus to a halt, even as corruption shook it to the core.

The controller and Auditor-General declared the corporation insolvent in 1995.