Naikuni says he was not behind KQ aircraft deals

Former Kenya Airways chief executive officer Titus Naikuni has denied knowing owners of offshore companies that the airline used to buy new aircraft.

The offshore firms, technically called Special Purpose Vehicles (SPVs), were used to buy aircraft directly from manufacturers and then lease them to Kenya Airways (KQ).

Mr Naikuni on Tuesday told a Senate committee probing Kenya Airways’ slump into a massive Sh25.7 billion after-tax loss that he did not know the names of the directors of two offshore companies incorporated by the airline’s lenders as part of a financing agreement to purchase 10 Embraer ERJ-190 from South America.

The firms — Samburu Limited and Amboseli Limited — based in Cayman Islands, were incorporated by Standard Chartered Bank and the African Export Import Bank (Afrexim).

In the financing agreement, the two firms, commonly referred to as SPVs, remain transitory owners of the aircraft until the loans are fully paid to the lenders.

“These are offshore companies owned by the lenders and KQ management can give you details of who owns these companies,” he said.

According to him, Barclays Bank, Standard Chartered and Afrexim are part owners of the companies.

Mr Naikuni said he placed announcements in the print media denying the insinuations that Samburu Limited and Amboseli Limited were phantom companies.

The ex-CEO denied being behind the sale of aircraft during his 10-year tenure at the airline.

“What I do recall is the sale of Airbuses 767, but that happened before I joined the airline,” he said.

Mr Naikuni was hard-pressed to explain why the ambitious Mawingu Project did not register success as had been anticipated during its formulation.

Mawingu Project

The Mawingu project was a ten-year expansion plan. It is during its implementation that the airline’s woes started to emerge.

Mombasa Senator Hassan Omar questioned how such a grand project as Mawingu could be thrown off balance by the emergence of Ebola (in West Africa).

“Could there have been a pre-planned scheme for graft in coming up with the Mawingu plan?” posed Mr Omar.

Mr Naikuni denied any knowledge of corruption in the intention and execution of the Mawingu Project, saying there was no room for such underhand deals.

“I am not corrupt and I am open for investigations as far as the Mawingu Project is concerned,” he said.

KQ management has blamed the slide into losses on, among other things, terrorism and the Ebola outbreak.

Sensitivity analysis

Senators criticised the airline’s management for failing to offer a sensitivity analysis during the Ebola outbreak as its rival, Ethiopian Airline, had done.

“So far, KQ has only come up with very general statements on operating during the Ebola predicament instead of offering a concrete analysis,” said Kisumu Senator Anyang’ Nyong’o, who chairs the joint committee.

Mr Naikuni could not substantiate what percentage of the airline business depends on West Africa, saying he did not have the actual figures.

The committee maintained that it was not satisfied that Ebola and terrorism led to the huge losses recorded by the airline.