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
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.
Safaricom CEO Bob Collymore