10,000 Lavington Security staff face pay delay as accounts frozen

The January salaries of an estimated 10,000 employees of private guards company Lavington Security Limited are at stake after the Commissioner of Co-operative Development froze the firm’s bank accounts in a dispute over non-remittance of staff Sacco deductions.

Lavington Security has in court filings revealed that the commissioner has issued agency notices to its bankers, Standard Chartered and Transnational Bank, in effect freezing its accounts.

The freeze, the company claims, has grounded its operations.

Lavington Security is accused of failing to remit Sh196.4 million workers’ deductions to Lavington United Sacco Society Limited, which prompted the Sacco to file a complaint with the commissioner.

The firm admits to owing the Sacco, but accuses its clients among them the Judiciary of failing to pay for services rendered.

The company, however, disputes the amount claimed and accuses the commissioner of freezing its bank accounts without giving it a chance to be heard.

“The continued freezing of the applicant’s bank accounts has completely paralysed its operations as the applicant cannot access funds to meet its day to day operations such as buying fuel for its response teams, airtime for its supervisors and paying guards,” says Jonah Kiprotich Telo, a director of the company, in a court affidavit.

Sh120m wage bill

The company puts its monthly wage bill at Sh120 million, implying that the workers get an average of Sh12,000 pay.

The firm claims that it has also been unable to pay statutory deductions such as the National Hospital Insurance Fund (NHIF) premiums, NSSF contributions and tax due to freezing of its accounts.

The High Court on Monday temporarily suspended the agency notice on condition that the firm pays the Sacco Sh35 million within seven days.

The case will return to court on January 29 to confirm if the conditions set have been met.

The dispute started on January 2 when the firm received a demand letter from the Commissioner directing it to remit Sh73 million to the Sacco within 14 days.

The arrears date back to December 2016.

But in its response, Lavington Security disputed this amount noting that it owed the Sacco only Sh40 million. The firm said the arrears date back to May 2018.

The firm further claims that it failed to meet its obligations due to failure by clients to pay it Sh709 million under a proposed payment plan.

A day later, on January 3, the commissioner issued the agency notice to the firm’s banks quoting a total of Sh196.4 million. The company is questioning the discrepancy.

Firm's clients

The firm says it learnt of the blocking of its accounts from the banks.

The company says it risks losing clients by failing to perform its contractual obligations due to lack of funds.

The court documents show that some of the clients that owe Lavington Security money include the Judiciary, Sameer Africa, Kenyatta University, County governments of Kericho, Nandi and Uasin Gishu, University of Nairobi and Kenya Methodist University.

Others are National Water Conservation and Pipeline Corporation, Kenya Rural Roads Authority, Technical University of Kenya and Geothermal Development Company.