Graft cut Sa­fari­com’s value to econ­omy by Sh23.7bn – re­port

The figure takes into ac­count Kenya’s global rank­ing on the Cor­rup­tion In­dex, and does not mean the firm lost the amount through graft, says cor­po­rate af­fairs di­rec­tor

The Star (Kenya) - - News Business - RICHARD MUNGAI @Richiy­mungai

About Sh23.72 bil­lion Sa­fari­com con­trib­uted to the econ­omy in the fi­nan­cial year ended March 2016 was lost through cor­rup­tion, its sus­tain­abil­ity re­port shows. The shock­ing rev­e­la­tion un­der­scores the mag­ni­tude of graft in Kenya.

The com­pany is es­ti­mated to have added Sh414 bil­lion to the econ­omy, 31.42 per cent more than Sh315 bil­lion in the pre­vi­ous year. This is about six per cent of the coun­try’s na­tional wealth, tech­ni­cally re­ferred to as the gross do­mes­tic prod­uct, which was es­ti­mated at $63.40 bil­lion (Sh6.40 tril­lion) in 2015.

“That figure [Sh23.72 bil­lion] was de­rived from a for­mula that our con­sul­tant KPMG uses to cal­cu­late a com­pany’s True Value to an econ­omy,” Sa­fari­com’s cor­po­rate af­fairs di­rec­tor Stephen Chege clar­i­fied in an email.

“There­fore, the figure at­trib­uted to cor­rup­tion takes into ac­count, among other things, Kenya’s global rank­ing on the Cor­rup­tion In­dex, and does not mean that Sa­fari­com lost Sh23.7 bil­lion through cor­rup­tion.”

The es­ti­mated value (of Sh414 bil­lion) is 10.8 times more than Sh38.1 bil­lion record net profit the gi­ant telco re­ported dur­ing the fi­nan­cial year.

Sa­fari­com sacked 18 em­ploy­ees dur­ing the fi­nan­cial year that ended on March 16, in fraud cases linked to in­ter­nal pro­cesses. Those fired were not linked to cor­rup­tion at the coun­try level, whose figure the KPMG quoted in its re­port on Sa­fari­com’s true value to Kenya.

The staff were among a group of 33 em­ploy­ees be­ing in­ves­ti­gated for al­legedly tak­ing part in 27 sus­pected fraud­u­lent deals, largely in­volv­ing as­set mis­ap­pro­pri­a­tion, fraud­u­lent ex­pense claims among other cor­rup­tion-re­lated of­fences.

This is, how­ever, a drop in fraud in­ves­ti­ga­tions from 29 cases recorded in the fi­nan­cial year 2015 and 89 in 2014.

“Cor­rup­tion re­mains one of the sin­gle big­gest ob­sta­cles to our long-term sus­tain­abil­ity and shared pros­per­ity,” Sa­fari­com chief ex­ec­u­tive Bob Col­ly­more said on Tues­day in Nairobi while re­leas­ing the re­port.

“Although ev­ery case of fraud is one too many, this trend is grat­i­fy­ing in as much as it sug­gests that the na­ture of fraud within the or­gan­i­sa­tion may be chang­ing from the col­lu­sive be­hav­iour of groups of peo­ple to the iso­lated ac­tions of in­di­vid­u­als.”

Col­ly­more is among the CEOs spear­head­ing the anti-graft war in the pri­vate sec­tor. He de­clared his wealth last De­cem­ber as part of an anti-cor­rup­tion cam­paign cham­pi­oned by the civil so­ci­ety. The dec­la­ra­tion showed he earns Sh9 mil­lion monthly, and has net as­sets worth Sh277.49 mil­lion.

/FILE

Sa­fari­com CEO Bob Col­ly­more

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