The Letter That Never Was … or was it after all?

THE LETTER THAT NEVER WAS, OR WAS IT

The Kenyan government is at pains to explain away an alleged letter written to Kenya Airway’s second largest shareholder KLM by someone within the government framework, claiming intent to exercise greater control over the airline since the shareholding rose, after the share rights issue of April this year, to just under 30 percent. Reports from Nairobi speak of Investment Secretary Esther Koimett only refuting that the Treasury was the one which had written to KLM, but not categorically denying that someone else in government actually did.

Speculation is now flying that indeed a group of sycophants and loyalists surrounding the country’s Prime Minister may have prompted such an approach, attempting to wash off the proverbial egg over their principal’s face, when he came out in the service of trade unions some weeks ago, attempting to ‘direct’ the airline to halt a staff restructuring exercise. That directive, as pointed out at the time, lacked any foundation in law and was subsequently ignored, reportedly causing the director and his bunch of merry men to seethe with anger, looking for other ways and means to get back at the airline’s management. Only last week was it reported here that the wave of go-slows and the temporary withdrawal of goodwill by KALPA, the airline pilots union under which Kenya Airways pilots are organized, were possibly prompted by such hurt egos seeking alternate routes to vent their anger and ‘revenge’ as it has been put to this correspondent at the time.

KLM was earlier in the year, for reasons never fully explained, unable to take up their full share of allotted right issues and their shareholding subsequently remained at 26.3 percent, unlike the Kenya government’s share which rose from 23 percent to 29.8 percent after absorbing the rights in full and then some more.

This shifted the position of largest shareholder from KLM to the Kenya government. Both shareholders are represented on the Board of Director with two nominees and going by conventional wisdom that equation is not going to change. It is the Board of Directors which in fact approved, with the votes of the Kenya government representatives, the Permanent Secretaries of Transport and Finance, the staff restructuring exercise, further pointing to deep divisions within sections of government over how to behave in such circumstances, either by fully respecting existing laws and regulations or for political expediency bending those and radicalizing the approach.

At present there is speculation that the airline’s CEO Dr. Titus Naikuni may seek elective office come the next general election in March 2013, and in a series of behind the scene moves have the divided parties already attempted to influence the process of selection of a new CEO, should this indeed become necessary. Dr. Naikuni has been CEO of Kenya Airways since 2003 but was previously serving on the Board of Directors when working as one of the Permanent Secretary’s of the so called ‘Dream Team’ led at the time by Dr. Richard Leakey as Head of Civil Service at the time. Watch this space to see how this saga is playing out in coming months.