Tourism agency chiefs suspended in fight for Sh700m coastal plot

State House has been drawn into boardroom fights at the Tourism Finance Corporation (TFC) that has seen five top managers removed over the past three months.

In one of the most far-reaching changes in a State corporation, the entire executive suite of the hotels lending agency has been booted out of office in a battle that is centred on the sale of multi-million shilling assets.

The battle took a new turn last week after a TFC executive fired a letter to the head of Public Service, Joseph Kinyua, complaining of harassment and forced resignation of executives.

“All senior management staff of the corporation have now been interdicted and/or forced to resign on very flimsy grounds,” said the executive.

“I hereby write to seek the intervention of your good office to stop senior management of the corporation from being harassed and forced into resignation by the acting managing director.”

Tourism secretary Najib Balala appointed Jonah Orumoi as acting chief executive of TFC on February 26, three months before Marianne Ndegwa’s term came to an end — effectively leaving the agency with two heads. Mr Orumoi replaced Ms Ndegwa, who was sent on forced leave pending her retirement this month.

The list of TFC executives who have so far been removed from office includes head of credit Abraham Muthogo, Dominic Ndegwa (investments) and human resources chief, Carolyne Misoi, who was suspended last week for issuing Ms Ndegwa an introduction letter for her private trip outside the country.

The agency’s head of legal, Carey Francis, and IT chief Shadrack Mwaniki have also left, rendering the corporation without substantive executives.

The acting managing director has also issued Ms Ndegwa with a letter threatening to sack her for allegedly employing an officer without the directors’ approval.

The letter ordinarily should have come from the board and not the acting managing director given Ms Ndegwa technically remains the most senior executive at the TFC. Ms Ndegwa declined to comment.

The boardroom clash pitting the executives against the directors started in March after Mr Orumoi’s appointment and when the anti-graft agency sought from the TFC details of the sale of a Sh700 million property in Mombasa.

The Ethics and Anti-Corruption Commission (EACC) was investigating complaints that the property was being sold without board approval.

The complaint had been filed by Coast Car Park & Amusement Centre, a firm that had leased the property and was opposed to its eviction following the sale.

“The EACC wanted details of board approvals but this was used as an excuse to frustrate the directors on the pretext that we were under investigations,” says one of the affected executives, adding that control of the prime Mombasa plot was at the heart of the spat.

Coast Car Park & Amusement Centre on April 28 lost the court battle opposing the sale of the property before Mombasa High Court judge Anyara Emukule.

Court documents show approval for the property sale was granted on January 2012, just months before the board was disbanded.

But the sale notice was delayed to February 2015 following late approvals from the Office of the President.

The corporation remained without a board between September 2012 and last October.

The clash between the executives and the directors coincided with the appointment of new board members by Mr Balala. 

Mr Balala appointed Said Mwangi on December 24 last year through a gazette notice. Mr Balala’s political adviser, Said Athumani, has been attending board meetings since January yet he is not a gazetted director of the TFC.

Mr Athumani has taken the place of Ann Karimi Kinyua, the officially appointed alternate director to the Tourism principal secretary.

The two are said to call the shots on a board that has lacked a chairman since 2012. President Uhuru Kenyatta is the one to appoint the board chairperson. Other directors are Pauline Rwamba, Franklin Ndii, Paul Kurgat and media owner Hanningtone Gaya.

The suspended executives reckon the Mombasa court verdict has vindicated their actions on the sale of the property.

The EACC annual reports and Kenya Gazette notices that list cases under investigation do not contain the TFC matter, putting the TFC board on a tight spot as it prepares to grill the suspended executives.

“We were not investigating managers (individuals) but rather the process of disposal of the said land to determine if it was done in a procedural manner as per the Rules & Regulation stipulated in PPOA (Public Procurement Oversight Authority),” said the EACC in a statement yesterday.

“No such recommendation has been made since investigations are ongoing.”

The corporation yesterday maintained that the executives were in breach of procurement rules, failed to get full board approval for the sale of the Mombasa plot and that the EACC is was investigating the executives over the sale of corporation assets.

“The EACC does not carry out enquiries. It investigates and the executives had to step aside because they are under investigations,” said a manager at the TFC who sought anonymity because the dispute is being handled by the board.

“How did they procure the sale yet the fund did not have a functioning audit and procurement department?”

He acknowledged board and ministerial approvals were sought for the sale of the Mombasa plot, but said that final go-ahead was not granted by the new directors. 

The EACC involvement in the matter started in April 2015. The corporation also reckons that the Mombasa property measuring nearly an acre was undervalued at Sh700 million, arguing it should go for more than Sh1 billion.

The sale for the property was key to the renovation of the 12-storey office building in Nairobi that has been declared unfit by the Fire Department and Kenya Power—which argues its wiring cables have aged and are a risk.

The Fire Department wants the building redone for its fire exits to terminate at ground floor and not at the first floor.

This was expected to cost Sh300 million with balance of Sh400 million from the property sale being used for onward lending to tour operators and hoteliers.

The corporation, which has a loan book of more than Sh1 billion, has been inactive in the lending market due to the leadership vacuum at a time when Kenya’s tourism industry is underperforming.

Visitor numbers and earnings have plunged in the last four years as Al-Shabaab militants launched a series of attacks on Kenyan soil in retaliation for Kenya’s military intervention in Somalia.

Kenya earned Sh84.6 billion last year, down Sh87.1 billion in 2014 and Sh97.9 billion in 2011. The corporation owns stakes in luxury hotels, including Intercontinental Hotel and Hilton, which have all been put up for sale.