KBC $5 billion (Ksh 769bn) saga: What you should know

ICT Cabinet Secretary Eliud Owalo has appointed Paul Macharia as KBC’s new acting managing director.

This comes after he suspended Samuel Maina, the former KBC managing director,  for committing the government to pay $5 billion (Ksh 769 billion) in an LCIA arbitration case involving Chanel 2 Group Corporation.

In a letter dated December 19, 2023 addressed to the chairman of the KBC board, CS Owalo said,

“The appointment of Mr. Samuel Maina as acting MD is terminated with immediate effect and he should proceed on suspension and disciplinary action instituted against him by the board.”

Currently, Paul Macharia is the communication economic expert at the National Communications Secretariat, which is under the ministry of ICT.

Owalo’s letter added that Macharia,

“Will serve starting December 19, 2023, for a period of 6 months or until the appointment of a substantive chief executive office pursuant to section 34 of the Public Service Commission Act, No. 10 of 2017.”

The CS also instructed the KBC board to expedite the recruitment process of a substantive managing director of the corporation.

What landed former KBC Managing Director Samuel Maina in trouble

Macharia’s appointment as the acting managing director at KBC comes after the suspended Mr. Maina committed the government to pay $5 billion in the LCIA arbitration of Channel 2 Group Corporation versus Kenya Broadcasting Corporation case.

Maina made the decision without seeking required approvals from key government entities, including the ministry of ICT, the National Treasury, department of justice, and the office of the attorney general.

ICT CS Owalo described Maina’s actions as a ‘total disregard of earlier instructions’ given to the national broadcaster on the issue.

 The LCIA case involving KBC

LCIA stands for London Court of International Arbitration. In 2006, KBC sealed a deal with Chanel 2 Corporation with the latter offering content.

However, KBC later terminated the contract in 2009 without notice, costing Chanel 2 billions in foregone profits and expenses accrued in the partnership.

The case has been at the London court and KBC’s former acting managing director gave the go-ahead to settle the matter with the $5 billion settlement, which has raised eyebrows in the ICT ministry and among Kenyans.