Those Plundering KQ Must Face The Music

Juakali1980 · 2016-10-17T18:06:36+00:00

GO News News|Business|Opinion|Lifestyle|Sports Home Business Business Audit exposes how employees, suppliers wrecked Kenya Airways &title=Audit%20exposes%20how%20employees,%20suppliers%20wrecked%20Kenya%20Airways'] &title=Audit%20exposes%20how%20employees,%20suppliers%20wrecked%20Kenya%20Airways'] &title=Audit%20exposes%20how%20employees,%20suppliers%20wrecked%20Kenya%20Airways'] &title=Audit%20exposes%20how%20employees,%20suppliers%20wrecked%20Kenya%20Airways'] Share Bookmark Print Rating Mbuvi Ngunze: KQ chief executive, is among those recommended for disciplinary proceedings for contravening Kenya Airways’s board provisions in dealing with collapsed Dubai Bank. TEA GRAPHIC By ALLAN OLINGO Posted Sunday, October 16 2016 at 07:04 In Summary Employees of Kenya Airways colluded with bankers, suppliers, ticketing agents and oil companies to steal from the airline through forgery and manipulation of the accounts. With Kenya Airways in financial distress, it turned to Dubai Bank, at the time a crumbling financial institution that would later go under, for help. On August 18, 2014, the board approved Dubai Bank as one of the banks that KQ could obtain facilities from to a maximum of $5 million. From the ticketing, fuel and accounting to the baggage and cargo departments, the audit trail tells a story of plunder and theft. Most of the KQ ticket prices filed in its system were below the minimum seat cost as per its finance records. SEE INFOGRAPHIC HERE Related Stories Kenya Airways bosses to face criminal charges Kenya Airways losing millions of dollars in buddy passes racket On Wednesday, February 11, 2015, a Kenya Airways employee in charge of treasury and controls, received the first of several payments from the collapsed Dubai Bank — $20,000. By the end of June of the same year, in eight other transactions, three of which involved his wife, this official had received a total of $220,000 in “transactions.” The case points to a complex scheme in which employees of Kenya Airways colluded with bankers, suppliers, ticketing agents and oil companies to steal from the airline through forgery and manipulation of the accounts. This is laid bare in the leaked August 2016 audit report by Deloitte, which The EastAfrican has seen. Irregular transfer Prior to the transfer of money to his personal accounts, the said employee had initiated and negotiated foreign-exchange transactions, an irregularity as only the chief executive, finance director, treasury manager and supervisor of funds management were authorised to do so. With such “privileges,” this particular employee, other KQ employees and Dubai Bank staff would activate foreign exchange transactions relating to the sale of the UAE dirham (AED) and the South African rand (ZAR), underquoting them, which resulted in a loss to the airline after repatriations. Interestingly, the airline was dealing with Dubai Bank even though it wasn’t one of the officially approved banks. “We determined that the KQ internal audit department was provided with forged bank statements by this employee. It is likely that the false bank statements were created in an attempt to conceal the various irregular repatriation transactions. Indications are that two named employees may have committed fraud and/or forgery in that they created inauthentic bank statement that they presented to the Internal Audit of KQ with the aim of concealing various irregularities in which they had been involved,” the report states. The auditors also found two repatriation transactions (one for ZAR3 million and one for AED2 million) in respect of which no payment had been received from Dubai Bank into a KQ Central Bank account. The total value of these transactions was $700,000, with two employees in the finance department found culpable. A loss of $5.2 million was recorded by the airline from these dubious transactions with Dubai Bank. The scheme was so intricate that Baghel Deeraj of Dubai Bank operated a fake email address with Bank of Africa (dheeraj@BOA.co.ke) when he wasn’t a staff member of the West Africa-based lender. “We determined that in some of the foreign exchange transactions relating to the sale of AED and ZAR, Dubai Bank would trade with BOA and then trade with KQ when a request to trade came through from KQ. We compared the amount remitted by BOA to Dubai Bank and the amount remitted to KQ by Dubai Bank from these trades and found that there was a shortfall of $1.6 million on the funds remitted to KQ,” the auditors said. With Kenya Airways in financial distress, it turned to Dubai Bank, at the time a crumbling financial institution that would later go under, for help. On August 18, 2014, the board approved Dubai Bank as one of the banks that KQ could obtain facilities from to a maximum of $5 million. On April 23, 2015, KQ obtained a bank guarantee of $7 million from Dubai Bank. This facility was $2 million above the approved limit. The bank guarantee facility letter was purportedly signed by Mbuvi Ngunze and Alex Mbugua in their capacities as the chief executive and financial director respectively. However, based on results from a handwriting analysis, it was only Mr Ngunze’s signature that appeared to be genuine, but that of Mr Mbugua was not. In two weeks, KQ had already paid $350,000 in fees for the bank guarantee that comprised 2 per cent commission fees and 1 per cent appraisal fees. However, the fees had been overstated by $140,000 as the total fees payable was $210,000. The payment of $350,000 was initiated by one employee, with the first approver being a supervisor, and the second approver a manager in KQ’s treasury. Theft by employees These are just a few examples of how employees at KQ colluded to steal from the airline at a time when the national carrier was struggling to stay afloat. 1 | 2 | 3 Next Page»

Thread starter Juakali1980
Start date Oct 17, 2016

Juakali1980

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Those Plundering KQ Must Face The Music

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