Monday, January 12, 2009

KPC, KCB, KTB: we are not or are we?

In the 90's you read a financial scandal and re-read to see if what you were reading was true or some fictional thriller. One gets the same feeling reading some of the stories now.
One Samuel Gichuru is now known for his billions made at KPLC via various schemes such as the treated or untreated poles, deliberate reduction of HEP and ofcourse his appetite for "relations". Then you recall NBK and its laundry list of bad uncollateralised and unrecorded loans to the honourable MPs.
Now KPC has a missing 56m litres of oil which was allegedly bought by Triton. Triton had used this oil as collateral to borrow (wait for it), Ksh2bn from KCB (and I am ignoring the Ksh90bn that KCB has apparently lent to Triton over 4 years on the assumption most of it has been paid)! KCB which I unfortunately commended the other day for being ahead in its risk management now risks having to provide for a large portion of this loan as it didn't actually have anything but letters of assurance from KPC about its collateral. Triton collapsed just before year end... And yes, KPC is due to be listed this year... By the way, why was Triton doing KPC's job for it?

Memo to KCB: In good times, risk management has to be first class, in bad times, natural risk aversion should kick in. Its your collateral and it doesn't matter if KPC is the only one with storage, you have to have letters of guarantee that says KPC will bear the substantial risk of the collateral. Its not me being clever in hindsight. Did anybody evaluate Triton's cashflow and finances before the loan?

As for KTB, the story shows another sad state of affairs especially when the tourism industry needs all the positive PR it can get.
So are we regressing back to m-o-i days again? My take is we are and I really hope that GoK is serious about divesting itself from business asap.

3 comments:

Esther said...

doesn't it just tire you to even think of these things? I mean we really need to up our game as Kenyans period! Look at the food situation, millions are facing starvation due to a few mens' greed. corruption is a crime against humanity

MainaT said...

Corruption should be a crime punishable by either life sentence or complete taking of assets.

coldtusker said...

Government should not be in the business of business