[kictanet] [africa-oped] Telkom’s growth is stifled by fraudsters colluding with staff

Thu Jul 12 00:21:27 EAT 2007

Mike and Kenyans

Thanks for the contribution. I request you to log online on
http://www.petitionspot.com/signature/TELKOMKENYA

Robert

On 7/11/07, Mike Theuri <mike.theuri at gmail.com> wrote:
>
>    This article appeared in 2005, but it becomes very relevant when it
> appears that there is a sudden and
> urgent rush to quietly privatize TKL by selling it to foreigners, while
> "restructuring and preparing" TKL for
> that process at taxpayers expense, a tax burden that future generations of
> Kenyans will still be paying
> with nothing to show for. The problems that TKL has are self created, they
> can be fixed and TKL should
> not be sold at such a throw away price that is hardly sufficient to cover
> the debt that has been and which
> additionally is likely to be transferred to the taxpayer. For those
> reading it is now 4 years to date since
> the secret dossiers mentioned in the article were written and no
> prosecution or conviction has taken
> place:
>
> http://www.eastandard.net/archives/sunday/hm_news/news.php?articleid=14743
>
> Self-inflicted woes
>
>
> Telkom's growth is stifled by fraudsters colluding with staff as
> competition
> bites, writes Gordon Opiyo.
>
> Top officials of Telkom Kenya are involved in fleecing the cash-strapped
> company
> of billions of shillings, according to independent investigations by the
> Communications Commission of Kenya.
>
> According to confidential reports prepared by the regulator, Telkom Kenya
> failed
> to take advantage of the five-year local and international fixed line
> calls
> monopoly due to collusion between the employees and an international
> syndicate
> of phone companies.
>
> In the estimation of then Transport and Communications minister John
> Michuki,
> Telkom had lost over Sh120 billion in the previous seven years due to
> these
> leakages.
>
> Yet the minister failed to stop the syndicates, and appeared to have
> acquiesced
> to them or become hostage. The company now has to grapple with tough
> competition
> after the end of the exclusivity status in June, last year, with about
> 10,000
> employees set to lose their jobs through an impending retrenchment
> exercise.
> While Telkom Managing Director John Waweru says the company has nothing to
> hide
> and is willing to co-operate with any investigators, indications are that
> there
> are still too many untouchables fleecing the parastatal.
>
> Information and Communications Permanent Secretary, Mr James Rege, plays
> the
> same refrain: "We have an open-door policy and will ensure that any
> official
> found to be involved in any improper deal takes responsibility for his or
> her
> action."
>
> Yet both officials have before them detailed reports of how the company
> lost the
> opportunity to take full control of the local and international calls
> market,
> despite having the advantage of being a monopoly. The decline was rapid,
> with
> countrywide subscriptions to Telkom Kenya's switchboard falling by 14.7per cent
> to 280,000 lines in June 2004 from 328,358 the year before. And whereas
> international calls used to generate 80 per cent of the total revenue a
> decade
> ago, the figure has dropped to about 30 per cent.
>
> Investigation
>
> After the raid on Data Global Limited Justice and Constitutional Affairs
> minister Kiraitu Murungi ordered the CCK to investigate the magnitude of
> the
> fraud and how it was perpetrated. The Kenya Anti-Corruption Commission
> also
> requested a similar brief.
>
> According to the reports, Telkom Kenya's revenue declined because of
> fraudsters
> adopting new technologies for transmitting international calls, and its
> failure
> to change fast enough.
>
> Fraudsters, with the help of Telkom Kenya employees, managed to get into
> the
> lucrative international call market by offering cheaper calls. Among the
> methods
> identified by the regulator's investigators were Voice Over Internet
> Protocol
> and the Very Small Aperture Terminal (VSAT). These technologies make it
> possible
> to make calls at a fraction of the cost of the traditional methods that
> Telkom
> Kenya used.
>
> Apart from the technology, Telkom entered into suspicious contracts with
> three
> companies – CDR, N-Tel and Zantel – which, according to the CCK, have the
> equipment to compress call traffic so that a small transmission capacity
> can
> handle more telephone lines than a normal Telkom system. The companies
> entered
> into agreements with the parastatal to terminate international calls from
> other
> countries at a much lower cost — obviously to the detriment of Telkom.
>
> For instance, a call that comes to the Telkom network from abroad is
> terminated
> at $0.2 per minute, but those that come through the other companies are
> terminated at $0.06 cents per minute. Worse for Telkom when the calls come
> to
> mobile phones because it loses Sh14.50 per minute. "Going by the
> statistics of
> the previous financial year (2002), where Telkom Kenya terminated over 17
> million international call minutes, this amounts to a loss of over Sh178
> million," says the CCK report to the Kenya Anti Corruption Authority.
>
> The CCK questions the manner in which Telkom awarded the contracts to the
> three
> companies, contravening three conditions laid down in its licence –
> condition 18
> on fair trading, condition 25 of informing the regulator of joint ventures
> and
> condition 26 that gave it exclusivity in the provision of international
> calls.
>
> In other words, Telkom gave up its exclusive rights to operate
> international
> calls to the three companies through the backdoor. Although the regulator
> says
> that they have not been able to get the real owners of the companies,
> investigations by The Sunday Standard have established that the firms were
> all
> owned by influential members of the previous administration and a former
> director of Telkom.
>
> What is interesting is that although the file on the fraud investigation
> in
> Telkom has been open at the Kenya Anti Corruption Authority since 2003, no
>
> action has been taken to stop the illegal operations. Instead, most of the
>
> officers investigating the have either been transferred or recalled to the
>
> Criminal Investigation Department.
>
> In December, last year, Dr John Mutonyi, assistant director in charge of
> investigations told The Sunday Standard that that his men were still
> investigating the matter. However, when contacted for the past two weeks,
> Dr
> Mutonyi failed to respond to our calls.
>
> The CCK report to Kiraitu says: "The kind of defense Telkom Kenya is
> giving to
> agreements, which are one of the biggest contributors towards the decline
> in its
> international revenue shows that individuals from Telkom Kenya are gaining
> from
> it."
>
> In an earlier interview with The Sunday Standard, Waweru had said that the
>
> contracts were signed before his management came into office and that the
> new
> team was reviewing them.
>
> The investigations also revealed that billions of shillings were lost
> through
> illegal satellite dish operators who, according to the briefs, were
> supported by
> Telkom Kenya staff to get telephone lines fixed to the local exchanges.
>
> "We suggest that an independent investigator be sought to address the
> problem of
> decline in Telkom Kenya's revenue including the illegal international
> traffic
> termination by Data Global at Lonrho House. Telkom Kenya cannot
> investigate
> itself on this matter because they appear to be abetting culprits,"
> concludes
> the report.
>
> However, two years after the secret dossiers were written, no major change
>
> action has been seen.
>
>
>
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