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{
    "id": 615211,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/615211/?format=api",
    "text_counter": 31,
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    "content": "bail out from taxpayers must be preceded by a visible and top level management shakeup. The Committee during its inquiry observed a myriad of issues; among these is; (i)The current group Managing Director and Chief Executive Officer(CEO), Mr. Mbuvi Ngunze, was a former Chief Operating Officer (COO) of Kenya Airways for three years, The Committee observed that at the point of being recruited to the position of COO, Mr. Ngunze was not qualified for that position as outlined in the Kenya Airways operations manual which is found in our Appendix, page 31of 118.The Board of Kenya Airways submitted to the Committee that it exercised its discretion to waive the requirement for 8 to10 years’ experience which allowed the current group Director and Chief Executive Officer to be recruited as Chief Operating Officer before the current appointment to Group Managing Director and Chief Executive Officer. (II) Kenya Airways has severally received funds in the form of cash bail outs from the Government. The most recent of the bailout was an amount of Kshs4.2 billion approved by the National Assembly in May, 2015. It only follows, therefore, that the principles of public finance contained at Article 201 of the Constitution, especially the principle of openness and accountability must be adhered to by the airline. Secondly, Article 229(5)and (6)of the Constitution which provides that the Auditor-General may audit and report on the accounts of any entity that is funded from public funds, and an audit report shall confirm whether or not public money has been applied lawfully and in an effective way, must equally be adhered to. (iii) Having gone through the above, the Committee observed that in order to solve the current fiscal crisis in Kenya Airways, there can only be three options opened to Kenya Airways; (i) Dissolution of the company. (ii) Recapitalization of the company through a rights issue or bringing on board additional share holders. (iii) Sale of Government shares of 29 per cent. The Committee observed that Kenya Airways as at 20th November, 2015 had appointed McKinsey and Company as lead consultants to ensure the turnaround of the company within the next 18 months. Of the three options, the Committee preferred the recapitalization of the company. Mr. Temporary Speaker, Sir, having observed these very serious issues, the Committee recommends a plethora of curative measures. Key among them; 1. Given the importance of the Kenya Airways to the Kenyan economy, the Committee recommends that the shareholders inject new capital into the airline to facilitate the turnaround of the airline. 2. That shareholders should provide a financial bailout in form of equity under the following conditions. These conditions must be met before any capital is interjected into the airline:- (i) A reconstitution of the Board of Directors by the major share holders. (ii) Restructuring and putting in place a management team with sufficient skills and experience in the aviation industry and with the ability to turn around and build the company. 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."
}