Auditors Expose Fraud at Kenya Airways
Employees of KQ are reported to have colluded with oil companies, bankers, ticketing agents and suppliers. Between February and June one of the employees is reported by The East African to have transacted $220,000 with the Dubai Bank. This information has also been revealed in the 2016 Audit Report by Deloitte.
It is worrying to note that the employee was using the services of Dubai Bank despite the fact that it was not one of the approved banks.
The audit report also reveals that the KQ Central Account did not receive a total of ZAR 5 million which was done through repatriation transactions. These transactions handled by two KQ employees add up to $700,000. These fraudulent transactions lead to a report loss of $5.2 million.
Currently, Kenya Airways in financial doldrums because of the financial actions taken by the airline. Back to the Dubai Bank issue, which was approved as one of the bankers for Kenya Airways on August 18, 2014. The ceiling of facilities to be received from Dubai Bank was set at $5 million. This ceiling was broken on April 23, 2015 when KQ received a bank guarantee value at $7 million from Dubai Bank. The facility was $2 million over the approved ceiling.
Live Forgery
The above guarantee was signed by Mbuvi Ngunze the KQ chief executive officer as well as Alex Mbugua, the financial director. The auditor used handwriting analysis and discovered that only the CEO’s signature appeared to be authentic.
It took just two weeks for Kenya Airways (KQ) to pay the transaction fees for the bank guarantee which stood at $350,000. This is made up of a 1 % appraisal fees and 2% commission fees. It is saddening to note that the fees had been inflated (overstated) by $140,000. That means the correct figure for the fees was $210,000. This is fraud that is sinking the ‘national pride.”
All these frauds were committed at a time when the airline was struggling financially. This is a sad story of theft and forgery in all departments.
The report further notes that there was fraud even with ticketing. Here there were discrepancies in terms of the prices charged for tickers and the records in the finance departments.
More financial misappropriations reported by the auditors:
- KQ regularly bought aircraft fuel at higher prices than the prices negotiated by the African Airlines Association (AFRAA). This action resulted to $32.9 million in losses.
- KQ paid more for invoices than what was agreed in the contracts
- Procurement Manager for jet fuel was revealed by the report to be owning a filling station which was not declared to the airline management. This is a case of conflict of interest.
- Fraud in foreign currency sales through illegal renegotiation of rates
- Online sales, back office services and Forex transactions with Dubai Bank without board approval.
What do else do you think is failing our national carrier – Kenya Airways?
Share your thoughts with us on the comments section.
