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Economy

Conflict of interest claims rock KQ bid to run airport

Jonny Andersen
KAA Managing Director Jonny Andersen. FILE PHOTO | NMG 

Parliament questioned the Kenya Airports Authority board over claims that its chairperson is the chief executive officer of one of two private banks that Kenya Airways (KQ) #ticker:KQ owes Sh5 billion.

The Public Investments Committee (PIC), which opened an investigation into the proposal by Kenya Airports Authority (KAA) to hand over the operations of Jomo Kenyatta International Airport to KQ, heard that Mr Isaac Awuondo is the chief executive of CBA bank which seeks to merge with NIC Bank #ticker:NIC. The two banks are owed Sh5 billion by Kenya Airways.

Nandi Hills MP Alfred Keter raised the possible conflict of interest when he appeared before PIC as a friend of the committee.

The team grilled KAA Managing Director Jonny Andersen over KQ’s bid to take over Jomo Kenyatta International Airport (JKIA).

“Our hope is in this committee to protect public interest and employees of KAA. The other committee of Transport may have been compromised.

“I need to know the main objective of merging KQ and KAA and for whose interest. KAA chairman is the CEO/MD of one of two banks, NIC and CBA which KQ owes Sh5 billion.

"The two banks are in a merger negotiation and this raises the issue of conflict of interest. Probably, the chairman has realised KQ has no capacity to sort out the loans hence the merger,” Mr Keter told PIC.

“It is also important for this committee to find out whether KQ has 28 aircraft and if it is true that two of three are owned by the airline and the rest leased from private entities,” he said

Mr Keter drew the attention of the committee to the KAA Act, Cap 395 that prohibits ownership of airports by private entities.

PIC chairman Abdulswamad Nassir directed Mr Andersen to appear alongside the KAA board on Thursday to shed light on the merger bid.

“From the look of it, this deal is terribly bad. A loss-making private entity cannot be allowed to take over a public entity that is making profit,” Mr Nassir said.

Mr Andersen was taken to task by MPs to explain why KAA is allowing the KQ takeover proposal.

“We are not bystanders in the proposal that came from KQ on the intended merger. We need to process it in a proper manner. We need facts on the table before we make a decision,” Mr Andersen said in response to questions by PIC member Gladys Wanga.

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