BY NT CORRESPONDENT.
A former Kenya Pipeline Company KPC board member Garrison Majanja identified governance as the biggest problem in the company a few years ago.
Majanja said there were number of apparent problems beginning with the then chairman Maurice Dantas and managing director Dr. Shem Ochuodho.
He claimed the two didn’t have management experience in terms of exposure to employment in business corporations, yet they were unwilling to cooperate or listen to board members.
He said the duo always ignored recommendations of the board and whenever they came up with a strategy the chairman would overrule them.
The witness said the two wanted to control the company by themselves and use the board as rubber stamp’s.
“This they did by ensuring that they controlled key board committees in which they installed themselves as chairman,” he stated a statement filed in court.
He told the trial court that at the beginning 2003, it was clear that KPC could not meet its financial obligations from its own revenue.
They projected a deficit of over Kshs.2 billion.
Majanja further added that members attended a board meeting on 22 and 23 of April, 2003, deliberated on the matter and gave approval to the management to explore possible sources to borrow funds.
He said on the board meeting held on July 21 and 24, 2003, the management reported to board that they had approached several financiers.
The management said they found Triple A Capital Limited attractive and offered to lend KPC Kshs.2 billion at one percent interest.
He said management further reported to the board that an approval to borrow the said funds had already been obtained from the ministry of Finance.
“This ministerial approval pre-emptied my desire to scrutinize the lending proposal as I assumed that such scrutiny must have been carried out by the ministry which was competent in that area.
The board finally approved the proposal and asked the management to set aside funds for repayment of the loan, he added.
The terms of the loan , the minister’s approval, the financial proposal from TACL, he said, were never laid before the board for discussion or information.
All the information, he said, come from the then KPC MD Dr Ochuodho.
He said he attended another meeting but didn’t recall the board ever being involved in deliberation regarding Standard Chattered Bank involvement in the borrowing from TACL.
Several minutes indicate that the resolutions on Standard & Chartered bank involvement in the borrowing arrangement were made.
“The board had issues with governance and I was one of the vocal members. We wrote a protest letter dated 27 November 2003 to the ministry seeking its intervention.
Then, they were protesting the decision by Dr Ochuodho to cancel a meeting intended to discuss board committee, procurement rules and authority for recruiting senior employees.
He said they were told that meeting was not within the board’s mandate.
He said on several occasions the chairman threatened to evict those who disagreed with his views.
He added that , at one time, the chairman told board members that if they were dissatisfied with the way he was running the meetings, they were free to resign.
He recalled an incident where the chairman told a board member identified as George Wachira, during a meeting to either shut up or resign.
“It is the chairman who constantly threatened to throw us out if we didn’t toe the line,” said the witness.
Majanja said the environment at KPC was not so friendly and working relationship with the chairman was bad as he treated them ‘like school girls and boys’.
“He used to bang the tables at us telling us to toe the line or resign,” Majanja said.
This situation, he added persisted in the board meetings throughout the year 2003 where members were consistently intimidated , threatened and manipulated by the chairman and the managing director.
The witness said the latter was equally abrasive and unwilling to openly deliberate on matters before the board.
The witness denied that there was acrimony between the three members, appointed to KPC from a committee that made recommendations on how to deal with the challenges facing the corporation.
He also denied allegations by Ochuodho’s lawyer that he made his statement to taint his client’s name. The witness said he knew very little about Triple A transactions.
In the case Dr Ochuodho, Terry Winjenje and Triple A Capital have been accused of conspiring to defraud KPC the colossal amount through a bogus refinancing deal.
