Economy

40-year-old Sunset Hotel bankrupt

hotel

The government-owned Sunset Hotel in Kisumu County. PHOTO | FILE | NMG

Summary

  • Sunset Hotel had cumulative losses amounting to over Sh117 million as at the end of June last year. This was up from Sh89 million incurred as at June 30, 2016.
  • The 40-year old hotel has also been cited for being in breach of Section 41(1) of the Public Audit Act, 2015 after failing to pay outstanding audit fees for the last 13 years.
  • According to the law, a state corporation whose accounts are examined and audited by the Auditor-General is required to pay for the costs of the services.

Sunset Hotel has been declared technically bankrupt, according to the latest report released by Auditor-General Edward Ouko.

The report indicates that the oldest hospitality facility in western Kenya had cumulative losses amounting to over Sh117 million as at the end of June last year. This was up from Sh89 million incurred as at June 30, 2016.

The statement of financial position also reflects a negative working capital of Sh27 million as the amount dropped from Sh82 million in the financial year 2015-2016 to Sh55 million in 2016-2017 fiscal year.

“In view of the foregoing, the hotel is technically insolvent and its continued existence as a going concern is dependent upon financial support from the national government and creditors,” said the report.

The 40-year old hotel has also been cited for being in breach of Section 41(1) of the Public Audit Act, 2015 after failing to pay outstanding audit fees for the last 13 years.

According to the law, a state corporation whose accounts are examined and audited by the Auditor-General is required to pay for the costs of the services.

Sunset Hotel has not settled balances of over Sh45 million as at June 30, 2017 with Sh4 million being audit fees.

Other costs involve Value Added Tax (VAT), Pay as You Earn (PAYE) and withholding taxes balances of Sh11.5 million, Sh5.4 million and Sh1.4 million respectively being arrears due to the Kenya Revenue Authority.

Mr Ouko, however, indicated that the arrears and penalties continue to attract additional charges as per VAT Act and Income Tax Act Cap 470, which have not been incorporated in the financial statements.

On the other hand, the State-owned hotel has been accused of failing to remit statutory deductions relating to the National Social Security Fund (NSSF), National Hospital Insurance Fund (NHIF) and the Central Organisation of Trade Union (Cotu) dues.

This means that the hotel has not complied with various aspects of the retirement Benefits Act, Labour and Employment Act and Cooperative Societies Act, noted the report.

On the 4.6 percent shareholding by the defunct Municipal Council of Kisumu, Mr Ouko pointed out that the same has not been transferred to the County Government of Kisumu as required by law.

This comes as Kisumu governor Anyang’ Nyong’o differed with the Tourism Finance Corporation (TFC), which has 95.5 percent shareholding, over the move to redevelop the hotel at a cost of Sh300 million.