Sponsorship millions spark factional wars and corruption claims at Kenya Rugby Union

When Mwangi Muthee was elected to chair the Kenya Rugby Union early this year, many saw it as a reward for his more than one year’s drive for change and accountability in what is arguably one of Kenya’s most popular sports.

But seven and a half months later, Mr Muthee has found himself in the spotlight defending his executive team from alleged misappropriation of sponsorship cash that has been flowing into the sport on strong showing of the sevens national team and the clean image the sport has had so far. 

Rugby has in the past few months attracted about Sh320 million in sponsorships for the next two years, making it one of Kenya’s best financed sports.

National carrier Kenya Airways leads the pack of sponsors with a Sh290 million package for the sevens team in the next two years, while East African Breweries has committed Sh45 million to the sport payable in the next three years.

Other sponsors flocked in for the Safaricom Sevens, which attracted about Sh45 million with Safaricom, the lead sponsor, contributing Sh30.2 million. But as the money has flowed in directors of the sport have been dishing out multi-million shilling supply contracts to companies they are associated with, putting Mr Muthee in a fix.

He cannot afford to rub members of the board the wrong way because they aggressively campaigned for him in the March elections.
“I am walking a tight rope with so many characters across the divide, young or old, who have varied interests in the game,” said Mr Muthee. “Our biggest war is against vested interests but we must make sure we destroy this dragon,” he said.

Mr Muthee’s biggest challenge comes from the fact that most of the directors who were in his camp during the bruising election now see this as their time “to eat”.

That support was critical to ending Richard Omwela’s eight year reign as the KRU chairman.

Local rugby clubs, who own KRU, are finalising plans to set up a company that will manage sponsorships and raise money for their operations and the Kenya Cup League.

Sponsors of the initiative said the idea was borne out of the realisation that cash from sponsors was not trickling down to clubs.

This means that KRU could soon face direct competition from its own members, a possible public relations disaster for the union that has tried to keep its house in order in recent years. The rift among the rugby union directors and their vested business interests  emerged during the organisation of the Safaricom Sevens event that was held two weeks ago. 

An email seen by the Business Daily and dated October 31, three days before the Safaricom Sevens kicked off, spills the beans.
Mr Jack Okoth, who was the Safaricom Sevens Organising Committee (SSCO) head of logistics, sent the mail to register his displeasure “at the way the chair is managing the Safaricom Sevens committee.

“This is motivated by the fact that there seems to be a lot of micromanagement, vested interest, and unnecessary interference,” Mr Okoth said in the email.

Mr Okoth further accused Myke Rabar, who chaired the SSCO having been appointed by the new office holders, of giving his firm an unfair advantage in procurement of services for the tournament.

Mr Rabar owns Homeboyz, the entertainment firm. “Being the CEO of Homeboyz entertainment that are suppliers and have sent quotations for various items with regards to the tournament, you should distance yourself from procurement of services as this presents conflict of interest,” said Mr Okoth, giving the example of the LPO of Copy Cat being withdrawn and Homeboyz taking over.

Mr Okoth also accused Mr Rabar of securing tickets for the tournament without going through the right procedures and that Homeboyz staff were handling the tickets, “making the integrity of these tickets questionable.”

Mr Rabar has denied the accusations. In his reply to Mr Okoth’s letter, Mr Rabar asked his accusers to “take the matter up directly with Zuku and Safaricom for the true position.”

He termed the accusations malicious rumours aimed at discrediting the new board’s efforts to clean up the sport.

Raised concerns
Asked about the matter, Safaricom’s director of Customer Care and Strategic Marketing, Mr Maurice Newa, said: “We immediately raised our concerns about this issue with KRU as soon as it came to our attention. They promised to address it formally.”

He added: “As is standard in our sponsorship portfolio, the Safaricom Sevens 2011 shall also be subjected to a full audit.”

Safaricom, the mobile phone services provider, sponsored the Safaricom Sevens to the tune of Sh30.2 million as lead sponsors.

Now in its 16th edition, the Safaricom Sevens has become one of the preeminent sevens tournaments on the continent.

Zuku, the brand name for online services provider Wananchi, has also been making a foray into sports sponsorship.

In July, Zuku made a Sh2 million sponsorship for the Kenya and Zimbabwe 15’s game in the tri-nation series.

Correspondence seen by the Business Daily indicates that Homeboyz pocketed at least Sh800,000 of the money for activation of the match, among other services rendered during the match, making it one of the biggest beneficiaries. KRU received Sh1.2 million.

Asked about the deal, Mr Muthee said the payments were arranged between Homeboyz and Zuku without prior involvement of KRU.

Besides insiders, individuals who source for business or sponsorship on behalf of the union have benefited immensely. Most have no contracts with KRU and if they have, their services are usually single sourced.
Sports consulting firm Sports Ventures helped KRU to secure EABL’s Sh45 million three-year sponsorship.

The deal means KRU will receive Sh15 million each year.

Sports Ventures is negotiating other sponsorships as well as developing a marketing and sponsorship programme for the union.
Asked about the validity of their contract with KRU, Francis Mutuku, a marketing consultant with Sports Ventures, insisted that the firm had worked with the union for long and was best placed to handle the tasks.

Sports Ventures is said to have received a 10 per cent commission per year from the sponsorship deal, translating to Sh1.5 million, according to KRU sources.

Mr Mutuku denied the claims, saying the sponsorship cash was yet to be received and no one had been paid.

“KRU has not received the money from EABL and is still working out details of the contract with the sponsor.

You will notice that though we mentioned them as sponsors there was no branding materials on the pitch during the sevens (Safaricom Sevens) event,” he said.

“No amount has been paid to Sports Ventures on account of that sponsorship. I really wish I got the Sh1.5 million.

My life would be very nice,” he said. Questions have also been raised over Sports Ventures’ offering KRU a “discretionary discount” of Sh750,000 of the total value of the contract, meaning that the sports consulting firm will only pocket half the amount. Mr Mutuku said the offer arose from the realisation that the union has a huge outstanding debt that it needs help to settle.

“We were informed that the union has a lot of debts and we may not get market rate agency fees,” said Mr Mutuku.

There is also the question of whether Sports Ventures did bid for the business in the first place.

“I didn’t competitively bid, but I know that the union has invited pre-qualification in the same area and most likely I may be thrown back into the ring,” said Mr Mutuku.

Pile of documents

The Business Daily asked whether Mr Mutuku had been close to Mr Muthee and helped him implement the KRU strategy, and whether that was the reason the union chairman had taken them on board.

“Allow me not to respond on that item, but Sports Ventures did work for Mwamba bringing in H20 as shirt sponsors, Lucozade as sponsors after H2O, Royal Media Group, Coca Cola, and KMC, among others in the last four years.”

He added that he did not know Mr Muthee and was only introduced to the chairman when Sports Ventures needed its contract with Mwamba signed. 

Mr Muthee was a long serving chairman at Mwamba before being elected to chair KRU in April.

In his response, Mr Muthee said he had a “pile of documents” showing outsourcing of agency business was the norm at the union, which does not have the capacity to execute marketing and sponsorship contracts on its own.

This raises the question as to whether any agency fees were paid after securing the two-year Sh290 million sponsorship deal with Kenya Airways for the Kenya sevens team.

That deal will see 18 players and four officials sign professional contracts to earn about Sh70,000 per month.

Mr Muthee said the negotiations were between him and airline officials, ruling out payment of agency fees.

“You know me. There is no way I can take a single cent from the game,” said Mr Muthee, adding that the cash would be put in a joint account with the airline to ensure accountability.

But despite Mr Muthee’s assurance, club officials insisted that something was amiss at KRU and that millions in cash sponsorships was not trickling down to them.

It is for this reason that club officials decided to set up a company that will facilitate direct sponsorships to the clubs.

This will be another blow to the KRU and a sign that some of the clubs are losing faith in its leadership. Officials behind the initiative said all the Kenya Cup sides, apart from Mwamba, Homeboyz, and Mean Machine, support the move and have tentatively signed up.
Supersport, and HSBC, the global bank which recently set up offices in Nairobi, are some of the potential sponsors. 
Previously, individual clubs have been going out to look for sponsors putting them on a collision course with each other and the union.