- Any supplier paid more than Sh1 million per month or Sh12 million per year will present their true owners with Kenya Power.
- The unprecedented move, which shareholders will be asked to approve at the company’s next annual general meeting on December 3, is designed to expose privileged deals and other potential conflicts of interest.
Kenya Power will require companies that supply them with goods and services worth millions of shillings to declare their final beneficiaries as part of the electricity distributor’s crackdown on corruption.
Any supplier paid more than Sh1 million per month or Sh12 million per year will present its true owners with Kenya Power and expressly authorize the company listed on the Nairobi Securities Exchange to disclose the same to its shareholders and regulators.
The unprecedented move, which shareholders will be asked to approve at the company’s next annual general meeting on December 3, is designed to expose privileged deals and other potential conflicts of interest.
It could also expose external parties who have been caught in the past in fraudulent transactions with other companies or Kenya Power.
Kenya Power’s financial position has substantially weakened in recent years despite enjoying monopoly status, with corruption and weak corporate governance cited as one of the main evils plaguing the company.
“All suppliers and persons who sell and / or supply electricity and / or other goods and services to the company in excess of an aggregate of 1 million shillings per month and / or 12 million shillings per year must disclose to the company the final beneficiary of the supplier and / or electrical power “, reads a new article that Kenya Power wants to introduce in its governance documents.
“Suppliers will expressly allow the company to disclose such final beneficiary in its annual financial reports and / or statutory communications.”
Kenya Power states that the special resolution to introduce the new article is based on the provisions of Section 93A of the Companies Act and the regulations enacted under the aforementioned provision.
That section of the law requires each company to keep a record of its beneficial owners, including their names and addresses. The information must be filed with the Business Register.
Kenya Power’s move, if approved, will take the requirement from a simple filing with the state to public disclosure and elevate the control of entrepreneurs doing business with the electricity distributor.
This will allow review of the information by a diverse group of stakeholders, including shareholders, regulators, activists and competitors of Kenya Power’s suppliers.
Negotiations with inside information are expected to be the first to be reported in the company’s transparency campaign.
Another resolution to be submitted to the vote of the shareholders seeks to authorize the board of directors to recover “the losses on the assets of persons found guilty of fraudulent trade with the company, including former executives and other high-level individuals who have served in the management of the company. “
Former Kenya Power CEOs Ken Tarus and Ben Chumo are among dozens of senior executives who have been arrested and charged in court for alleged bribery and abuse of office.
In addition to fighting corruption, it will also expose the faces behind the lucrative procurement at the utility company that spends more than Sh100 billion annually on the purchase of electricity and other goods and services.
Kenya Power claims it has a significant inventory of obsolete inventory, indicating the company will suffer heavy losses on some of its past sourcing decisions.
“The shareholders, having examined the accounts for the financial years 2020/21 and 2019/20, are concerned about the high level of slow and obsolete inventories and the inability of the company to recover the provisions taken in the years 2019/2020 and before, “The company says so in its communication from the general meeting.
The company says it has now strengthened its procurement processes to ensure the quality of goods meets internal standards and that suppliers have a solid reputation and track record, among other checklists.
The decision to expose its contracts to public scrutiny is among the reforms implemented by Kenya Power which has relied on government intervention to keep the lights on.