Kenya Railways Scandal: Billions Lost in Dubious Land Sales and Corruption Allegations Linked to MD Mainga

Kenya Railways Corporation (KRC) is facing serious allegations of corruption, financial mismanagement, and ethical breaches under the leadership of Managing Director Philip Mainga. A petition filed by advocate Matasi Yatundu has led the Nairobi court to demand responses from Mainga and other involved parties.

Allegations Against Mainga

• Financial Mismanagement: The petition claims significant financial losses within KRC due to irregular procurement practices and a lack of accountability.

• SGR Loan Default: KRC reportedly faces a substantial financial penalty for defaulting on the Standard Gauge Railway (SGR) loan.

• Misleading International Investors: The corporation is accused of enticing foreign companies with land development promises, only to renege, leading to international legal disputes. Notably, a legal notice from a high-ranking member of the Qatar Chamber of Commerce highlights unfulfilled real estate commitments.

• Irregular Land Leasing: Concerns have been raised about questionable land leasing within the Nairobi Railway City development and SGR station areas, allegedly conducted despite ongoing development plans.

• Dubious Financial Dealings: The petition cites financial improprieties in transactions with companies like Autoports Freight Terminals Ltd, resulting in significant financial losses due to irregular practices.

Legal Proceedings

Honorable Justice E.C. Mwita has mandated that all parties be served with the pleadings, allowing a 14-day period for responses. A subsequent hearing is scheduled for March 31, 2025, to provide further directions on the case.

Implications

These allegations, if proven, could have far-reaching consequences for KRC’s leadership and operations, potentially undermining public trust and investor confidence in Kenya’s rail infrastructure development.

As the legal process unfolds, stakeholders and the public await clarity on the veracity of these claims and the future of KRC’s management.

EACC Investigates Mismanagement of Retirees’ Funds

The Ethics and Anti-Corruption Commission (EACC) has initiated an investigation into senior officials of KRC concerning the alleged mismanagement of Ksh8 billion designated for retirees. This probe centers on the Kenya Railways Staff Retirement Benefits Scheme (KRSRBS) and its involvement in the questionable sale of 139 acres of land in Makongeni, Nairobi.

Kenya Railways Scandal- Scrutiny of Irregular Land Sale

In its latest report for the 2023/2024 financial year, the EACC confirms an ongoing investigation into KRSRBS. The scheme, responsible for managing pension and retirement benefits for former KRC employees and providing financial support to the dependents of deceased workers, is among 534 cases under review for corruption, economic crimes, bribery, and unethical conduct.

The report highlights that the KRSRBS CEO oversaw the irregular disposal of Land L.R No. 209/6829, measuring 139 acres, during the 2021/2022 and 2022/2023 financial years. This transaction, valued at Ksh8 billion, has raised significant concerns regarding transparency and accountability.

Pensioners’ Complaints Trigger Investigation

The investigation was prompted by complaints from Kenya Railways pensioners in 2023, alleging that a senior government official attempted to seize the land for residential flat construction. Since 2020, KRSRBS has advocated for its 7,000 members to benefit from the government’s affordable housing program, which aims to deliver 20,000 housing units.

This is not the first inquiry into KRSRBS’s financial dealings. Five years ago, the Directorate of Criminal Investigations (DCI) launched an investigation into the sale of prime properties worth billions. The probe focused on allegations that KRC sold these assets at significantly reduced prices to the lowest bidders, who subsequently resold them at a profit.

National Assembly Orders Pension Payments

The EACC’s report comes two months after the National Assembly’s Public Petitions Committee, chaired by Kitui East MP Nimrod Mbai, directed KRC to expedite outstanding pension payments to former employees. This directive followed a petition by Benson Mocheo, a former KRC station manager who served for 17 years from January 8, 1968, and has yet to receive his pension.

The committee urged KRC to take administrative action against officers responsible for delays in pension processing. The report instructs Kenya Railways Corporation to clear Mocheo’s pension within 30 days of the report being tabled. Mocheo further called on lawmakers to hold accountable those responsible for pension violations, highlighting his prolonged struggle to access his rightful benefits.

Auditor General Flags Governance Issues

Auditor General Nancy Gathungu, in her report on the Controller of Budget Staff Retirement Benefits Scheme for the year ending 2023, raised concerns over non-compliance with trust deed regulations. She noted that the Board of Trustees had remained in office since the scheme’s establishment in June 2017, despite a rule limiting their term to a maximum of three years.

“The Board of Trustees served for more than six years, violating Clause 7 (h) of the Trust Deed and Rules, which states that unless removed from office, trustees may serve only one additional three-year term,” the report states.

KRSRBS management attributed the delay in holding elections to the absence of an election manual. They stated that a draft manual was under development but had not yet received approval at the time of the audit.

These developments underscore the critical need for transparency and accountability within the management of pension funds to protect the rights and benefits of retirees.

Mainga’s Attempts to Suppress Whistleblowers

In April 2024, Kenya Railways Managing Director Philip Mainga issued stern warnings to employees, threatening legal action against those leaking confidential documents exposing corruption within the corporation. Fearing that dismissed staff might collaborate with media outlets to reveal internal malpractices, Mainga cited legal provisions to deter such disclosures.

Insiders reported that he referenced CAP 187, deeming unauthorized release of official documents illegal, aiming to intimidate potential whistleblowers. Despite these threats, legal experts noted