8 September 2010

Nairobi — The Kenya Anti-Corruption Commission has launched investigations into a major scandal at the troubled Kenya Railways Staff Retirement Benefits Scheme.

The agency is investigating a racket in which some board members have been renting out Railways houses across the country especially in Nairobi at triple the recommended rent and pocketing the money.

Some of the board members are also said to have been involved in irregular sale of the scheme's properties.

The scheme has nine board members and its chair is Beryl Odinga, Prime Minister Raila Odinga's sister. The chief executive is Mathew Tuikong.

KACC director PLO Lumumba confirmed yesterday that he has launched investigation on irregular sale of the scheme's properties especially land and irregular sub-letting of houses.

"We have received reports of possible irregular sale of land and other properties belonging to the scheme and we are working with relevant government agencies to unearth details of these transactions.

"We are also looking at possible cases where houses are said to have been irregularly sublet at exaggerated rent and once we finish our investigations we will decide the next cause of action," said Lumumba.

According to documents seen by the Star, KACC also wants to find out why salaries for employees have been delayed for months and why many pensioners aren't paid on time.

The Retirement Benefits Authority (RBA) has finished an audit on the operations of the scheme and unearthed irregularities in the way the scheme is managed and how the Kenya Railways' assets are being disposed of.

"The report was handed to some board members a few days ago and it clearly calls for a review or further investigations into some of the transactions that have been entered to by some board members. That report has however been kept away from some board members," said a source familiar with the goings on at the Scheme.

The RBA moved in to investigate the scheme's board of trustees following complaints by pensioners of "gross misconduct" and irregular sale of properties.

The scheme owns prime properties across the country especially in the city centre and its environs worth billions of shillings but owes its more than 9,000 members millions of shillings in pension arrears.

It is estimated that the scheme is worth more than Sh19 billion yet it has struggled to pay salaries and pensions.

The KRSRBS, which was established in 2006 after the concessioning of the Rift Valley Railways (RVR) as a pension scheme for former Kenya Railways Corporation (KRC) employees, owns land on Landhies Road (Muthurwa) in Nairobi.

"We are living from hand to mouth. Each time we sell a property, all the money goes paying pensioners and operational costs," said a board member.

A group of politicians, businessmen and wheeler-dealers are understood to have taken control of a prime plot in the Nairobi Central Business District under suspicious circumstances.

The 72-acre prime parcel in Muthurwa is up for sale with a plan to demolish the old and dilapidated houses and replace them with ultra-modern units, shopping malls, office blocks and parking silos.

It is understood that hundreds of trees which were on the plot were bought by a well known businesswomen a paltry price of Sh5,000 irrespective of their size. There was no competitive bidding before the trees were sold.

The Kenya Railways Pensioners Association has also raised the alarm over the irregular disposal of the scheme's properties.

The association's secretary-general Robert Azaria alleged that some of the properties were undervalued while others were illegally leased to foreigners.

Azaria said a prime property valued at Sh1 billion was leased to a foreigner for 26 years after he paid Sh100 million.

In one case of outright abuse, one of the trustees was allocated a house along Matumbatu Road and the house was registered in the name of the trustee's daughter. Since the allocation was made more than a year ago, the trustee has not paid rent to the scheme.

"The trustee has rented out the house to another tenant at Ksh 130,000 month yet what the scheme recommends is Sh35,000 monthly. So instead of giving the scheme its share the trustee takes all the money," said another source aware of the deal.

The Star also established that a senior official of the scheme allocated one of the houses, now Red Card Centre, to the people who campaigned against the new constitution.

"Officially that Red Card Centre is allocated to a Mr Kiprono who was asked to vacate the house on the promise that he will be given a job at NSSF. Even after Red Card people took over the scheme is yet to receive rent arrears amounting to Sh300,000. Whether the Red Card people have paid that rent to Kiprono we do not know," said a board member.

Yesterday Kiprono confirmed he had vacated the house which was given to the No people but refused to give details of how the house ended up the headquarters of the Vote No campaign whose defacto leader was Higher Education Minister William Ruto.

"Who told you about me and this house? Yes it is true that I was asked to move out but the job offer is still there. So don't blow this out," he said and refused to give his second name.

Questions are being raised on the status of a proposed development of Golf City along Uhuru Highway.

The project, a partnership between KRSRBS and KRC, has quietly gone silent even after the two entities came up with magnificent designs consisting a nine whole golf course, five-star hotel, conference facilities, shopping mall among other developments.

Though KRC advertised for the 73-acre parcel and 44 companies expressed interest, the Chinese firm that won the contract to develop the $600 million project is still encountering hurdles that have made it impossible to develop the project.