Mr Bob Collymore declared his wealth last year to kick start his campaign to champion integrity in corporate suites. He was a key contributor in drafting the anti-Bribery Bill that Parliament recently passed into law, which criminalizes giving bribes as well.
Besides, the Safaricom CEO is a member of United Nations Global Compact, a group of global corporations that are committed to fighting graft and promoting respect for workers’ rights.
Based on these credentials, Mr Collymore is the dream CEO any company would die to have. But being the most admired CEO who is overseeing a den of vultures ready to cut deals with suppliers has tainted his clean image.
While the KPMG report does not name him in any of the questionable deals, the buck still stops at his office. It’s a culture that he may not have inherited from the former CEO, Michael Joseph since the timing of the audit (2013-2015) signals that this is the period that staff developed new habits of compromising the integrity of the company’s systems.
The fact that he ordered the audit somehow vindicates him, saving the disgrace that would have come with an independent audit commissioned by, say, the board or its major shareholders.A parliamentary committee is set to grill executives, suppliers and contractors to shed light on allegations of multi-billion-shilling tendering irregularities at the company, which will paint Safaricom in negative light and dent its storied reputation.
Nairobi-based businessman Michael Ngugi, seen as a front to some bitter losers in the race for Safaricom cash, petitioned the National Assembly to investigate procurement-related scandals at Safaricom, where the Treasury directly holds a 35% stake, Vodafone holds 40% while the remaining 25% is listed at the NSE.
The listing thrust Safaricom in the public sphere where every of its action and step is watched with a keen eye. The profit front has been impressive and its shareholders are assured of dividend every year. Its stock at the NSE has appreciated from the Sh5 initial public offering (IPO) price to the current Sh8.
Compromises on corporate governance are not new in Kenya. There are many recent cases such as Uchumi, National Bank of Kenya, Imperial and Chase Bank. Left to go on for long, such unseen deals can bring a company down to its knees, like it has happened to Uchumi Supermarket which is now facing financial hardships after some managers conspired to squeeze cash out of it. National Bank is tottering on the brink, while Chase bank bit the dust.
Safaricom could be lucky, as the whistle has been blown early in the day. After the audit, Mr Collymore is likely to overhaul the company’s management and tighten the checks and balances as recommended by KPMG. Perhaps even fire those implicated in compromising procurement procedures to send a strong message across the company and re-tender suspicious contracts.
He put up an advert to defend the company’s reputation, saying he is the one who internally retained KPMG to audit Safaricom as part of efforts to improve corporate governance. He, however, said the report was illegally obtained and leaked to the public and that Safaricom has reported the matter to the Directorate of Criminal Investigations and is awaiting its findings.
Safaricom was recently ranked Kenya’s most influential brand in 2015 in a survey by research firm Ipsos. The leading telecommunications firm has been lifted by over 20 million subscribers who use its products every day. Its mobile money transfer service M-Pesa, came second in the survey confirming the strong impact the mobile operator has on Kenyan lives.
Safaricom’s growing size has attracted numerous bids for what’s seen as its huge trove of cash and many suppliers are willing to grease anyone’s hands if only to access the resources. The company announced in May that it expects to make history in East Africa by hitting US$2 billion in revenues, US$1 billion in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), or the measure of the amount of cash that the business is generating purely from its operations.
But a little reported note was that capital expenditure in the financial year 2016/17 was in the range of Sh32 billion to Sh33 billion. This is addition to its operations expenditure of Sh41 billion, which includes everything that the company spends on from publicity, leased lines, IT operations expenses, rent, insurance, office tea etc.
In essence, Safaricom’s management was signaling that the firm will maintain its investment spend at roughly the same level it has been doing in the last five years. With the business generating Sh30 billion annually in free cash flows, Safaricom is saying it will continue spending, annually, the equivalent of what it cost to build the Thika Super Highway in the coming years.
So an even tighter battle by suppliers is expected. And Bob Collymore, his eyes and ears should be steadier than ever.
