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{
    "id": 606866,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/606866/?format=api",
    "text_counter": 336,
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    "speaker": null,
    "content": "Hon. Members of this House may remember that in 1996 in the National Assembly, we voted solely to give the Kenyan Government support to write off Kshs6 billion worth of debt in Kenya Airways when it was privatized; it thereby attracted a partner, Royal Dutch Airlines (KLM) and, subsequently, became a member of the Sky Team in 2000. As Members of the National Assembly then and even now, we do not regret having written off that debt for Kenya Airways because for quite some time it was doing very well. It was, indeed, the pride of Africa. However, as things stand now and as Fareed Zacharia, the well-known Economist who writes for the Newsweek said recently looking at the Great Britain; he observed that Great Britain had resigned as a world power. We are also looking at the possibility of Kenya Airways resigning as the pride of Africa because of what is happening to the company. Most of these things have come around as a result of a series of unfortunate investment decisions that both the Chief Executive Officer (CEO) and the Board have made over the last 10 years. Mr. Naikuni started very well, but towards the end of his tenure as the CEO of Kenya Airways he tremendously deteriorated. One of the reasons he deteriorated as a manager is because he was too interested in his own business which was connected with the affairs of Kenya Airways. That conflict of interest quite often makes for dire consequences to a public operation or a company, when management sidetracks their interests to personal processes of accumulation instead of concentrating on using their talents to improve the business performance of such companies. Mr. Speaker, Sir, let me point out some of the issues that have come up. One of them is that, not only were the investment decisions of the Board and the CEO wrong, but also the Board and the management have always insisted that what needs to be done at Kenya Airways to make it run profitably is to cut costs. Cutting cost is good if, indeed, it produces efficiency. However, if it produces inefficiency and lack of performance as we are seeing in Kenya Airways, then it is not good. One of the things that have happened is that workers are laid off rather haphazardly and for reasons that do not add up to good business practice. Further, that outsourcing some of the activities of Kenya Airways has actually led to higher cost for the airline and more opportunities for rent-seeking for both management and some of the employees. For example, if you remember from the days of the East African Airways Corporation, the Corporation owned almost everything; the planes, buildings and movable equipment on the runway. Everything belonged to the Corporation. When Kenya Airways took over from the EAAC, this is what it did; it owned what it used at the airport and employed its employees which it paid. A couple of years ago, the management of Kenya Airways decided to outsource almost everything. They could then sell equipment like a tractor to a private farm and then lease it back to Kenya Airways. They even went further to selling aircrafts to certain companies and then leasing them back to Kenya Airways. The end result is that Kenya Airways has been paying very dearly for leased aircrafts and equipment. The Kenya Airways Pilots Association (KAPA) has, therefore, asked us – they have sent a document to me – that there needs to be a forensic audit. The audit should be The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate."
}