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

Thu Jul 12 21:10:46 EAT 2007

All,

I believe the article below had a brief note indicating that it was written
in 2005, it is thus not a new article and there was no oversight. It is due
to years of prior and ongoing mismanagement that an artificial need to sell
Telkom has been created. Regardless of who the current MD/CEO of Telkom is,
Kenyans want to know why their corporation in which they have a stake in as
taxpayers is being sold at a throw away price to foreigners by persons to
whom the public trust has been placed in, secondly law abiding Kenyans have
a right to know why prosecutions and convictions of those involved in the
theft of billions in public funds from and through Telkom have not taken
place. The Anti-Corruption and Economic Crimes act is very clear on these
matters, the government and its law enforcement arms are duty bound to
enforce the laws of the country. What this impending sale will do is ensure
that Kenyans will have been slapped twice in the face, first through the
cheap sale of a corporation in which public funds have been expended and
secondly, through the escape from prosecution of the culprits who have
benefitted from TKL's coffers. Or is the government now waiting for the
statute of limitations to take effect in these matters ?

http://www.marsgroupkenya.org/Reports/LawsandConventions/Kenya_Anti-Corruption_and_Economic_Crimes_Act_2003.pdf

On 7/12/07, Lizette Kraft <lfkraft at gmail.com> wrote:
>
> Hi Robert,
>
> Kindly note you stated that Mr. John Waweru the Head of Telkom  -   Mr.
> John Waweru is the managing Director of CCK and not Telkom. He WAS the MD
> but was moved to CCK. Mr. Sammy Kirui is the MD of Telkom now and WAS the MD
> for CCK initially. They were swapped around..
>
> I guess you know that already?? and this was an oversight??
>
>
>
>  On 7/12/07, Robert Alai <alai.robert at gmail.com > wrote:
>
> >  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
> > > 14.7 per 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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> Lizette Kraft
> P.O. Box 18488, 00500
> Nairobi, Kenya
> Cell: 0722-800362
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