Hours after the Kenya Pipeline Company MD Joe Sang handed a letter to the board — saying he would not go for another term — it emerged that three senior managers will “likely” be asked to step aside over the multibillion-shilling scandals at the State corporation.
For ages, even before Mr Sang came on board, KPC has been hostage to political and commercial interests — and strategic appointments were always at the behest of political forces.
Over the weekend Mr Sang, perhaps aware that his reign had come to an end, reached out to his close social and political allies and hinted at the possibility of stepping down. Some tried to influence board members to support him, but yesterday, after an early morning meeting, the board was unanimous KPC needed a new fillip.
Security sources say some KPC managers being investigated by police face imminent arrest in the coming days. Already, Director of Public Prosecutions Noordin Haji has appointed Queen’s Counsel Khawar Qureshi to lead corruption cases, which is seen as a pointer to more arrests. Mr Qureshi is, among other things, an expert on oil and gas litigation.
Mr Sang, who holds a master of business administration in strategy and a bachelor of arts in economics, is an accountant and joined KPC as general manager for finance strategy from Kenya Breweries, where he was head of group business performance.
He was later appointed CEO on April 13, 2016, by Energy Cabinet Secretary Charles Keter after a contest with 64 applicants who had applied for the position. His appointment was shrouded in controversy after a consumer lobby group, Cofek, alleged that the new CEO lacked “administrative capacity and competence to handle such a huge parastatal.”
It was Mr John Ngumi, the board chairman, who defended CS Keter’s choice — only to find himself in a quandary as scandals, both new and historical, started to rock the corporation.
Mr Sang made the mistake of going on record to defend a Gill House-based company, Aero Dispenser Valves Limited, which had been awarded a Sh600 million tender to supply aircraft refuelling equipment for Nairobi’s Jomo Kenyatta International Airport by a previous MD, Mr Charles Tanui, an appointee of then Energy Cabinet Secretary Davis Chirchir.
Already, the Ethics and Anti-Corruption Commission has arraigned several suspects in court over this procurement. Insiders had told the Nation, which exposed the scandal, that a pipeline welder was behind the briefcase company that was used by insiders to tailor tenders and award them to select companies. The welder, Francis Amina Juma, has already been charged in court.
While Mr Sang had said in paid-up adverts that Aero Dispenser Valves was owned by Jackson Odero, Michael Opudo and Willbard Otieno, the detectives later found out that the company was owned by Francis Obure and Beryl Khasinah, the wife of John Huba Waka — Mr Juma’s nephew. More so, the company had never filed its returns since November 2014 despite receiving contracts worth Sh647 million.
Mr Sang had also inherited the Sh48 billion 450-kilometre Mombasa-Nairobi pipeline, a controversial project that had been awarded to a Lebanese firm, Zakhem, which was unable to complete it on schedule, leading to extra costs.
Legally, a company can vary its tender by 25 percent, an avenue used by many firms to get more money from State corporations. But the demand for an extra Sh11 billion raised eyebrows in Parliament.
While these historical tenders haunted his reign, Mr Sang was soon caught up in his own mess after more than 21 million litres of fuel went missing at the oil firm. Fingers were soon pointed at insiders, who were accused of siphoning fuel at the KPC depot and cooking figures to reflect it as either spillage or vandalism.
It was this fuel scandal that forced the 10 leading oil marketers to protest — and demand to conduct a forensic audit on their stocks. In a joint letter dated October 26, 2018, they demanded to be allowed to check the accuracy of stock statements issued by KPC and get to the bottom of what was turning out to be bogus records of loss.
Mr Sang had crafted an adverse warning to the board and was asked to prepare a brief on how KPC lost millions of litres through alleged vandalism and pilferage. The shock was that annual audits had not captured the details of the loss and the board was hearing about it for the first time.
The board was also worried that if the insurers won’t pay (and they have said they won’t), KPC might be forced to take up the bill. The oil marketers had, during a stormy meeting at Serena Hotel in Nairobi, refused to pass the bill to the consumer.
KPC has no fuel of its own and holds stock in its system on behalf of the oil marketers, and now cannot account for the missing product.
When the Nation visited the field where the oil spillage was supposed to have occurred, it found no such evidence of material spillage.
Sources say Mr Sang had wanted to call a press briefing but was prevailed upon not to do so. Instead, he wrote to his senior managers and rubbished the Nation investigations: “The story has a litany of untruths and inaccuracies and we are currently analysing it. Meanwhile, I want to assure you all is well and there is no cause for panic.”
Mr Sang, whose first term was to end in April next year, threw in the towel on Tuesday morning — the same day that the board invited the DCI to investigate the oil losses.
In the letter, Mr Sang said that “due to personal reasons” he would not be seeking an extension of his term, which effectively ended his troubled tenure at KPC.
In a press statement signed by Mr Ngumi, the KPC board chairman, the board also invited oil-marketing companies to conduct a forensic audit of stock positions and to complete the exercise by December 31.
“The board directed management to accord maximum cooperation to both the DCI and the forensic auditors,” Mr Ngumi said.
Later in the day, the oil marketers, who had been asked to conduct a forensic audit by the end of December, told Parliament they did not agree with the deadline.
Mr Joe Muganda, the Vivo Energy managing director and chairman of the Supply Committee of Supplycor Kenya Limited, told MPs that industry players and KPC had not agreed on an independent auditor who is to carry out the forensic audit on the loss of 11.6 million litres. Supplycor is the umbrella company owned by oil marketers.
“This is the reason I am not sure we will meet the December deadline. We want to be sure the audit company will do a credible report that will be agreeable to us and KPC and will help us make a final decision,” Mr Muganda told the National Assembly committee.