Battle for control of Sh5.6bn eCitizen takes new twist
National Treasury PS Kamau Thugge. He insists that the exchequer did not give permission to any private firm to collect funds on its behalf. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
By the time that the government asked the service provider, Safaricom, to stop Goldrock from collecting the money in 2014, more than Sh5.6 billion had been paid through the eCitizen platform.
Documents indicate that it was Webmasters Kenya which built the World Bank-funded eCitizen platform after being contracted by the government.
Webmasters Kenya also argues that Goldrock illegally obtained documents that are now part of the court record.
Ten months after Treasury disowned a firm that had been collecting all the revenue from eCitizen users, the battle for the control of the online portal has taken another twist, with new information indicating that the two firms involved in the Sh5.6 billion saga are related.
In court papers, Treasury principal secretary Kamau Thugge had previously stated that the government did not authorise any private firm to receive eCitizen payments on its behalf.
eCitizen is an online portal through which the government provides essential services such as applications for passports, driving licences, business registration certificates, vehicle logbooks and title deeds but — unknown to Kenyans — the money was going into an M-Pesa paybill account set up by a local company.
SERVICE PROVIDER
By the time that the government asked the service provider, Safaricom, to stop Goldrock from collecting the money in 2014, more than Sh5.6 billion had been paid through the eCitizen platform.
New filings in court in the case where Goldrock wants to control the platform now indicate that Goldrock Capital and Webmasters Africa — the two firms at the heart of the matter — share directorships.
It has emerged that Mr Sidney Ngunyi Wachira, the chief executive officer of Goldrock Capital, is also a director of Webmasters Africa, which subcontracted eCitizen fund collection under mysterious circumstances.
Documents indicate that it was Webmasters Kenya, wholly owned by a Mr James Ayugi, which built the World Bank-funded eCitizen platform after being contracted by the government. It rolled out the online service provision portal in July 2014.
FUNDS COLLECTION
A few months later, a firm called Webmasters Africa approached Goldrock Capital and subcontracted the funds collection works to it.
It was Goldrock which registered an M-Pesa paybill number to which the Sh5.6 billion was sent to by Kenyans seeking government services.
But with questions raised on why a private firm was collecting money on behalf of the government — and where Treasury had no control — the National Treasury, in April last year, successfully ordered Safaricom to lock Goldrock out of the paybill number and ordered Mr Wachira’s firm to surrender all relevant documents relating to the account.
Court documents have now revealed that Webmasters Africa has 10 directors, including Mr Wachira and Mr Ayugi, indicating that all companies involved in the mysterious collection of funds are related.
Details about the complex web of ownership emerged after Goldrock sued the National Treasury, Safaricom, Webmasters Kenya and its sister company Webmasters Africa in May last year seeking to regain access to the paybill number in which eCitizen funds are paid.
PRIVATE FIRM
Treasury PS Kamau Thugge has since insisted through affidavits that the exchequer did not give permission to any private firm to collect funds on its behalf.
Mr Ayugi has now admitted that he is a principal shareholder and chief executive of both Webmasters firms but insists that they are separate legal entities. In essence, his companies are suing each other. In a fresh application, Webmasters Kenya has sought to be struck out of the suit.
Mr Ayugi insists that he negotiated the subcontracting works on behalf of Webmasters Africa.
He argues that Webmasters Kenya is a stranger to the subcontracting deal, despite admitting to having negotiated a subcontracting contract for eCitizen funds collection with Goldrock, on behalf of Webmasters Africa.
“Webmasters Kenya did not at any time suggest, imply or propose that Webmasters Africa will act on its behalf for the roll out of an end-to-end integrated mobile financial solution on the eCitizen portal which is why there was never a contract between the two parties. I represented and negotiated discussions in relation to the Mobile Money Settlement Outsourcing Agreement between Goldrock and Webmasters Africa in my capacity as CEO of Webmasters Africa,” Mr Ayugi insists.
OBTAINED DOCUMENTS
Webmasters Kenya also argues that Goldrock illegally obtained documents that are now part of the court record.
In particular, Webmasters Kenya has taken issue with copies of contracts it signed with the World Bank prior to setting up eCitizen.
Mr Wachira, on his part, insists that Mr Ayugi told him that the subcontracting was done by Webmasters Africa on instruction by Webmasters Kenya.
“Sometime in July 2014, Webmasters Kenya approached Goldrock Capital to offer an end-to-end integrated mobile financial solution on the portal which Goldrock rolled out on November 20, 2014 after registration of paybill number 206206.
“Before signing the agreement, Webmasters Kenya introduced Webmasters Africa and suggested that the agreement for provision of the services be between Webmasters Africa and Goldrock Capital.
“Webmasters Kenya cannot now feign ignorance of the presence and role of Goldrock, as its CEO, one James Ayugi, is also Webmasters Africa’s CEO,” Mr Wachira says.
PAYING WEBMASTERS
Treasury PS Thugge has, however, thrown a spanner in the works, arguing that Mr Ayugi wrote to the exchequer in June, 2017 admitting that Webmasters Kenya subcontracted Webmasters Africa to collect funds.
Mr Thugge has attached the letter, which shows that Treasury had been paying Webmasters Africa US$1 (Sh100) for each M-Pesa transaction on the eCitizen platform.
The letter means that Mr Ayugi’s firms and Mr Wachira’s Goldrock had a 50-50 split of the funds paid by government for each transaction, before Treasury locked the latter out.
“Even though the subject matter relates to the convenience fee charged under the eCitizen portal under paybill number 206206, vide a letter dated June 27, 2017, Webmasters Kenya wrote a letter to the National Treasury laying claim for convenience fee relating to e-visa services offered by the government of Kenya whereby Webmasters Kenya has admitted its relationship with Webmasters Africa,” Mr Thugge says.
COLLECTING FUNDS
The Treasury PS has joined Goldrock in asking High Court judge Mary Kasango to dismiss Webmasters Kenya’s request for expunging documents.
Mr Wachira says Treasury was aware that Goldrock had been collecting the funds because it published a gazette notice in December 2014, approving the use of an eCitizen M-Pesa paybill number, knowing that it had been registered to Goldrock Capital.
Justice Kasango has ordered the parties to return before her on October 10.
