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Insights on KBC top boss firing and Sh750b court ruling

The Acting Managing Director (MD) of the Kenya Broadcasting Corporation (KBC) Mr Samuel Maina has been fired with immediate effect.

In a letter dated December 19, 2023, and addressed to the Chairman of the board, Eng. Benjamin Maingi, says that the appointment of Mr Maina is terminated with immediate effect.

Mr Maina who was appointed in March 2022, has been accused of committing the Government of the Republic of Kenya to pay USD 5 billion to the London Court of International Arbitration (LCIA) Arbitration without seeking the concurrence of the Ministry, National Treasury, and the office of the Attorney General and Department of Justice in total disregard of earlier instructions given to KBC on the matter.

“Mr Samuel Maina should proceed on suspension immediately and disciplinary action instituted against him by the Board,” ICT and Digital Economy CS Eliud Owalo noted.

He, at the same time, appointed Mr Paul Macharia, currently the Communication Economic Expert at the National Communications Secretariat, which falls under the mandate of the Ministry of Information, Communications and Digital Economy.

“With effect from December 19, 2023, I appoint Mr Macharia as the Acting Managing Director for a period of six months or upon the appointment of a substantive Chief Executive Officer pursuant to section 34 of the Public Service Commission Act, No. 10 of 2017,” he added.

CS Owalo instructed the Board to expedite the process of recruitment of a substantive Managing Director for the corporation.

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In the letter dated December 18, Mr Maina had committed to pay LCIA Arbitration No. 12223: Channel 2 Group Corporation vs Kenya Broadcasting Corporation.

“We have noted the contents of your email and wish to instruct you to proceed and offer Channel 2 Group Corporation the total sum of US Dollars 5 Billion in full and final settlement of the matter on a without prejudice basis,” Mr Maina wrote.

Maina, a former Vice-President of the Kenya Editors’ Guild, served as KBC’s Editor-in-Chief.

In February 2022, the arbitration cost cast the spotlight on the risk that the key State agency poses to taxpayers on account of a 13-year legal dispute that could lead to billions in losses.

Parliament’s Budget and Appropriations Committee in 2021 raised the red flag on the case, currently under arbitration in London, as one of the risks to taxpayers.

“The committee further observed that the Kenya Broadcasting Cooperation is facing a lawsuit estimated at Sh40 billion in London UK for termination of a contract it had with Amjam TV, which later incorporated British Virgin Islands,” stated the Budget and Appropriations Committee in its report.

The dispute dates back to 2009 when KBC terminated a joint venture agreement with Dubai-based businessman Ajay Sheth, owner of Channel 2 Group.

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According to court documents, KBC and Channel 2 entered a joint partnership in 2006 where the State broadcaster would provide technical equipment while the latter supplied the new digital station with staff, programming content and resources.

However, Channel 2 and Mr Sheth argue that KBC terminated the deal without notice in 2009, costing the businessman billions in foregone profits and expenses sunk into the joint venture.

The case is under arbitration in London, where the KBC and in extension taxpayers are staring at an Sh40 billion payout should the case go in favour of Channel 2.

According to the latest data from the National Treasury, KBC reported Sh1 billion in internally generated funds in the 2020-21 financial year, largely from State transfers, and Sh305 million in losses.