Senate endorses report that calls for sacking of KQ boss

Corporate News

Kenya Airways Group CEO Mbuvi Ngunze addresses the media during the release of the company’s half-year results in Nairobi on November 12, 2015. PHOTO | FILE 

By LYNET IGADWAH, ligadwah@ke.nationmedia.com

The Senate on Thursday endorsed a report calling for the sacking of Kenya Airways chief executive Mbuvi Ngunze and possible prosecution of his predecessor Titus Naikuni.

This came after the Senate unanimously adopted a report by the Select Committee on Inquiry into Affairs of Kenya Airways following its record Sh25.7 billion loss in the year to March 2015.

“The current Group Managing Director and Chief Executive Officer, Mr Mbuvi Ngunze, was the former Chief Operating Officer of Kenya Airways for three years. The committee observed that at the point of being recruited to the position of chief operating officer Mr Ngunze was not qualified for that position as outlined in the Kenya Airways operations manual,” states the Senate report.

The report was tabled on the floor of the House on Tuesday after the committee completed a four-month investigation which started in June. It calls for the prosecution of the former management, which was led by Mr Naikuni, if found to have contributed to the financial loss of the carrier.

“The Ministry of Transport and the National Treasury have questioned the management of KQ in regard to the decisions made in the past. Investigations are ongoing and action will be taken on any persons, whether past or current, found culpable for the financial loss.”

The report also recommends that KQ be restructured and the setting up of a management team with expertise in the aviation industry to turnaround its fortunes.

Kakamega Senator Boni khalwale said besides sacking Mr Ngunze, Treasury Secretary Henry Rotich and his Transport counterpart James Macharia should be held accountable for the airline’s misfortunes.

“During the inquiry we established that the two were not attending board meetings which are vital in decision making,” he said.

The Senate probe brought Mr Naikuni under the spotlight over decisions made by his management team which have been blamed for the airline’s record loss. The slide to loss making dates back to 2012/13 when the airline made an operating loss of Sh9.012 billion.

READ: Senate recommends sacking KQ managers, bailout

The loss was linked to Project Mawingu, an ambitious 10-year strategic plan aimed at positioning Nairobi as a hub for flights from the East, notably China and India.

Under the plan, KQ undertook an expansive flight modernisation programme leading to expensive and huge borrowings to fund flight acquisitions, spare engines for aircraft and made payment for ordered planes.

Mr Khalwale said the airline’s management had, during the enquiry, denied the committee access to documents on the airline’s high operating costs which are blamed for its liquidity problems.

Kisumu Senator Anyang’ Nyong’o said there is also need for a forensic audit to be carried out to unearth operational ills.

“We recommend a forensic audit on operations of KQ to establish any misappropriation or corruption so that those found guilty are held culpable,” he said.

The report recommends that KQ shareholders, who include the Treasury, should provide a financial bailout in the form of equity only under certain conditions.

The conditions include reconstitution of the board of management and putting into place a management team with sufficient skills to turn around company.

The senators also want KQ to hire a new marketing director. “Infusion of capital can only be made upon meeting the conditions stated above. The committee does not recommend any bailout that does not take into full account the above conditions,” states the report.