NEW KCC IN MELTDOWN! Tribal Favoritism, Secret Office Move & Ksh 1.5B Loss Push Firm to Edge of Collapse

New revelations suggest that New Kenya Cooperative Creameries (New KCC) is spiraling toward institutional collapse faster than previously anticipated, with sources now predicting the state-owned dairy processor may not survive beyond July without immediate intervention.

In what insiders describe as a desperate and secretive maneuver, acting Managing Director Samuel Ichura issued a memo on May 2nd directing an immediate relocation of headquarters operations to the company’s Dandora Complex.

The abrupt move, scheduled to take effect May 5th, has caught staff off guard and intensified concerns about the leadership’s intentions.

“All the head office team will be operating from Dandora complex without exemption,” stated the memo addressed to departmental heads, according to sources familiar with its contents.

The hasty relocation comes as the dairy processor grapples with devastating financial results revealed in the Auditor General’s report, which documented a Ksh 1.5 billion loss before tax for the year ending June 2024.

The report further confirmed that New KCC’s liabilities exceed its assets by more than Ksh 1.2 billion, placing the once-prominent institution in what financial experts term “negative working capital” territory.

Ethnic Tensions Escalate Under Current Leadership

Multiple whistleblowers within the organization have raised alarm over what they characterize as “tribal capture” of key positions under Ichura’s leadership.

Sources allege the acting MD has continued hiring new personnel despite an already bloated workforce, with new recruits allegedly drawn disproportionately from his Kikuyu ethnic community.

“What we’re seeing is a systematic effort to stack departments with individuals from one community, often with personal connections to leadership,” said a senior employee who requested anonymity for fear of reprisal.

“Some of these appointments appear to be relatives or associates with questionable qualifications.”

These allegations follow earlier reports of tension between Ichura and board chairman David Maina, with sources claiming Ichura has been pushing for a Kalenjin chairman to be appointed to improve his chances of securing permanent appointment as MD.

“Beginning of the Fall”

The current crisis has deeper roots that predate Ichura’s tenure, according to veteran employees. One insider expressed frustration that warnings about a hasty leadership transition went unheeded.

“We had told them not to do erratic transition but someone insisted Sigey must go,” the source said, referring to former MD Nixon Sigey’s removal.

“The dismissal of the whole board was the beginning of the fall of New KCC.”

The source directly blamed “greedy government advisors” for lobbying for Ichura’s appointment, allegedly to advance private political interests rather than the corporation’s welfare.

The leadership vacuum has spawned multiple unfair dismissal cases now before the Labour Court, filed by employees who believe they were targeted during the leadership shake-up.

Legal experts warn that these cases could further drain the company’s already depleted financial resources.

Financial Freefall Continues

The dairy processor’s financial position has become increasingly precarious, with the Auditor General Nancy Gathungu’s report painting a grim picture of institutional decline.

The company reportedly spent nearly Ksh 192 million on interest payments alone last year, while delaying payments to suppliers and farmers for more than 120 days.

This payment crisis has triggered unrest throughout New KCC’s supply chain, with many farmers and vendors threatening to withdraw their services.

Sources familiar with operations say the company is now heavily reliant on loans and overdrafts to maintain even basic functions.

An internal audit has reportedly raised questions about potential financial irregularities within the sales and marketing department, with accusations of doctored statements involving certain suppliers, primarily Kikuyu-owned supermarkets allegedly connected to the acting MD’s previous tenure in the finance department.

Parliamentary Oversight Pending

Despite the escalating crisis, New KCC management has yet to appear before the Public Investments Committee on Social Services, Administration and Agriculture to respond to the Auditor General’s damning findings.

The committee, chaired by Navakholo MP Emmanuel Wangwe, is tasked with providing oversight of the state corporation.

This delay in accountability comes despite President William Ruto’s recent assurances during a Mt Kenya tour that his government remains committed to revitalizing the dairy sector through New KCC.

The president had pledged timely payments to farmers and promised facility upgrades to boost processing capacity.

Industry observers note a growing disconnect between these public commitments and the deteriorating reality within the organization.

Future in Doubt

As New KCC joins the expanding list of struggling state corporations flagged for potential merger, dissolution, or absorption by the Cabinet, stakeholders across Kenya’s dairy sector are expressing alarm about the potential ripple effects of its collapse.

“If urgent corrective measures are not implemented within weeks, not months, we are looking at a complete institutional failure that will devastate thousands of dairy farmers, especially small-scale producers who depend on New KCC as their primary market,” said an agricultural economist who consults with government agencies.

With the institution’s viability now in serious question, all eyes are on the government’s next move as the July deadline looms.

For now, the office relocation to Dandora appears to many insiders as merely shuffling deck chairs on a sinking ship, with structural issues of financial mismanagement, ethnic favoritism, and leadership failures remaining unaddressed.

This article follows our previous exposé on the internal challenges facing New KCC published last month.