Whistleblower Calls for Safaricom CEO’s Dismissal Over Alleged Fraud in Letter to Vodafone and Vodacom

A whistleblower has written to Safaricom’s parent companies, Vodacom and Vodafone, demanding the dismissal of Safaricom PLC CEO Peter Ndegwa following an explosive report alleging fraud at Kenya’s largest telecommunications company.

A recent investigative report by Kagirison Research has uncovered serious allegations of fraud, corporate misgovernance, and tender manipulation within Safaricom PLC. The report, titled “Ndegwa, Rigathi, and Fraud in Safaricom Group,” implicates several high-ranking employees and affiliated companies in a complex web of corruption and unethical practices.

The letter.

Key Allegations

The report alleges that Paul Gathura, a senior employee at Safaricom, manipulated procurement and tender-awarding processes to favor a select group of companies.

Many of these companies, reportedly controlled by politically connected individuals from Murang’a County, were allegedly onboarded into Safaricom’s supplier network through questionable means.

Additionally, the report claims that Gathura influenced the termination of seven employees in the procurement department and facilitated the unprocedural hiring and promotion of others.

Among the companies implicated in the alleged tender fraud are Pavicon Group, Tetranet Services Limited, and Technninds Technologies Limited.

Notably, Pavicon Group, which has been contracted by Safaricom, is not registered as a legal entity in Kenya, raising concerns about Safaricom’s adherence to its own corporate governance rules.

Layering and Proxy Ownership

The report explores the concept of “layering,” a process where companies create complex ownership structures to obscure the identities of their ultimate beneficial owners.

For instance, Circle Gas Limited and CircleTech Limited, both registered in the United Kingdom, are linked to Safaricom’s M-Gas product.

These companies allegedly benefit from European equity and debt financing while operating in Kenya.

The report further alleges that Peter Waititu Ndegwa is one of the directors of Circle Gas Limited.

In Kenya, Pavicon Kenya Limited and Pavicon Technologies Limited are cited as examples of same-jurisdiction layering, where companies under the same ownership bid for the same contracts, potentially skewing the tender process in their favor.

Safaricom’s Response

Safaricom CEO Peter Ndegwa.

As of the publication of this article, Safaricom has not issued an official statement addressing the allegations. However, the company’s Supplier Code of Conduct explicitly prohibits suppliers from entering into financial relationships with Safaricom employees that could create a conflict of interest. If proven true, the allegations would represent a significant breach of these guidelines.

Implications for Safaricom

The allegations could have far-reaching consequences for Safaricom, which has long been regarded as a pillar of corporate governance in Kenya. The company’s share price, which is heavily traded on the Nairobi Securities Exchange, could face downward pressure if investors lose confidence in its management. Additionally, Safaricom could face regulatory scrutiny and potential fines for breaches of corporate governance and anti-corruption laws.

Calls for Accountability

The report has sparked calls for greater transparency and accountability within Safaricom. Boniface Shikuku, a commentator on the report, emphasized the need for Safaricom to uphold its core values of “Simple, Honest, and Transparent” governance. “These allegations, if true, are a betrayal of the trust that millions of Kenyans have placed in Safaricom,” Shikuku said.

The allegations of fraud and corporate misgovernance within Safaricom serve as a stark reminder of the challenges even the most reputable companies face in maintaining ethical standards. As the investigation unfolds, stakeholders will be watching closely to see how Safaricom addresses these serious accusations and whether it can restore its reputation as a leader in corporate governance.