KQ to pay ex-finance boss Sh144m for sacking

Former KQ finance director Alex Mbugua. FILE PHOTO | DIANA NGILA | NMG
Former KQ finance director Alex Mbugua. FILE PHOTO | SALATON NJAU | NMG 

Former Kenya Airways #ticker:KQ finance director Alex Mbugua is set to get a hefty payoff of at least Sh144 million from the national carrier after a court ordered his reinstatement following unlawful termination in January last year.

Mr Mbugua has been fighting his sacking for the past 22 months, claiming that he was let go as part of a vindictive scheme by current and former top managers to conceal plunder at the airline.

Employment and Labour Relations Judge Monica Mbaru yesterday ruled that Mr Mbugua, who held the position for eight years, was not given a fair hearing in the disciplinary proceedings which were commenced against him before termination.

“The claimant (Mr Mbugua) is hereby reinstated... to his position without loss of benefits and any lawful entitlement to be paid within 30 days,” ordered Lady Justice Mbaru.

“In the alternative, the respondent shall pay the claimant salaries due for three years. Compensation amounting to 12 months’ salary at the last gross salary due on January 19, 2016.”

Mr Mbugua’s last salary was about Sh3 million per month, indicating that the national carrier may have to pay him at least Sh144 million to part ways with him as ordered by the court.

The alternative is for Kenya Airways to give him back his job beginning today morning, but still pay him for lost earnings during the time of his termination.

The judge said Mr Mbugua had been placed at a disadvantage by his employer when he was requested to defend his performance yet he had also been told that he was going to be sacked.

“It is the finding of this court that his termination was unfair and the order that is appropriate in the present instance is that of reinstatement,” Lady Justice Mbaru ruled, while directing that Mr Mbugua reports to work at 8.30 a.m. today for allocation of duties.

Insufficient to warrant termination

The Labour court also found that though the arguments raised by the national carrier to justify Mr Mbugua’s sacking were reasonable, they were insufficient to warrant the termination.

The airline sacked Mr Mbugua, 52, on grounds of poor performance, but his lawyer John Njomo argued before court that his client was competent and qualified for the job.

Before his sacking, Mr Mbugua and former chief executive Titus Naikuni were the two highest paid employees at KQ. In the year to March 2015 — the last full financial period with Mr Mbugua as the airline’s chief finance officer (CFO) — the annual take-home for the two executive directors was Sh95 million.

Following yesterday’s judgment, the national carrier may opt not to appeal and instead hand Mr Mbugua his job back.

However, the cash-strapped airline will have to pay him dues backdated to January 2016, a bill of roughly Sh66 million. The airline’s management, which is now headed by a new CEO, Sebastian Mikosz, could also choose to negotiate a settlement with their estranged CFO and end the protracted corporate battle.

This option would, likewise, require KQ to part with Mr Mbugua’s accumulated salary payments and top it up with a negotiated severance pay, leading to a final large payout.

'No notice'

KQ, which is currently busy trying to reach closure with creditors on its proposed restructuring plan, said it had not been served with the notice reinstating Mr Mbugua by close of business yesterday.

“We are therefore still awaiting the formal court order. In the meantime, the company is consulting with its lawyers on the way forward,” the airline said in a statement.

Mr Mbugua, when filing his suit in April 2016, claimed he was handed the pink slip for, among other things, raising the alarm on irregular ticketing practices in some stations like London and recommending a review of KQ’s relationship with KLM.

He further argued that KQ’s massive losses should be blamed on former CEO Mbuvi Ngunze and former commercial director Gerard Clarke, saying they failed in their duties of ensuring the airline collects the targeted revenues.

This disagreement hit a crescendo in August when Mr Mbugua, in a letter to the airline’s chairman, Michael Joseph, accused Mr Ngunze of corruption and backstabbing. He also roped in former chairman Dennis Awori in the decision to fire him from the top job.

The former finance chief claimed that he was the one who initiated the Deloitte forensic audit that Mr Ngunze and Mr Awori were now bent on using to have him prosecuted.

“I believe there are other parties at large who would want me locked up for good to ensure that the huge revenue losses are buried with me forever,” Mr Mbugua wrote in the letter, highlighting that he did not feature in the audit report.

In light of the case, the High Court had stopped KQ from hiring Mr Mbugua’s replacement. This has seen Dick Murianki hold the finance director position in acting capacity.

Last Friday, Mr Mikosz, through an internal memo to staff, announced that Hellen Mwariri was the airline’s new acting CFO, adding that  Mr Murianki had moved back to head the airline’s cargo unit “at his own request.”