Chiloba: Sh25m mortgage was paid to me because I bought a house from my father

Suspended Communications Authority (CA) boss Ezra Chiloba has said that he secured a Sh25 million mortgage through the agency’s mortgage scheme to buy a house from his father, who then instructed that the money be paid to an account under Mr Chiloba’s direct control.

While denying that he was both seller and buyer in the mortgage loan and that he also self-approved it, the Director-General (DG), in a lengthy response to a show-cause letter and an audit that formed the basis for his suspension two weeks ago, denies wrongdoing and accuses the CA board of punishing him unheard.

Mr Chiloba sent a nine-page response to CA Board Chair Mary Mungai on October 2, in which he admits that he bought the house from his father, Mr Joseph Simiyu Wakhungu, but adds that the money was paid to Kitale Hilmost Ltd, a company in which he is the sole director holding 51 per cent stake with the remaining 49 per cent shares unalloted.

“My father had acquired the property sometime in 2015. For all intents and purposes, this is the property that I intend to settle with my family,” Mr Chiloba says in the response.

He adds that valuation of the property was done by two valuers; one assigned by CA and another from Trans Nzoia County. He denied that it was overvalued by over 64 per cent.

Also Read: Why Chiloba was suspended

According to Mr Chiloba, CA assigned a valuer to inspect the property on September 9, 2022, before he signed a sale agreement with his father less than two weeks later on September 20.

Documents relating to the property were later charged on November 21 and registered on November 23, 2022.

When it came to payment of the Sh25 million, Mr Chiloba says, his father instructed his lawyers that the money be paid to Kitale Hilmost Ltd and a letter was later sent to communicate his instructions on December 5, 2022.

“Like any other vendor, the seller who happens to be my father, Mr Jacob Wakhungu, exercised his discretion as to where the purchase price was to be remitted. His instructions were unequivocal and had to be acted upon by the advocates on record to realise his intention and objectives. This was purely an administrative arrangement after both contracting and completion had occurred. To the best of my knowledge, the authority’s policies on staff mortgage scheme do not prohibit such transactions,” Mr Chiloba says.

He describes Kitale Hilmost Ltd as an agribusiness company established to cater to his family’s business interests. He denies that he has abused office and that he intended to defraud CA, indicating that he continues to make monthly repayments for the mortgage.

Mr Chiloba says the process of application and approval of mortgage at CA are mapped out in its Enterprise Resource Planning (ERP) system. The applications and approvals, he adds, are processed online with appropriate controls in place.

Also Read: I'm not privy to Chiloba's suspension — Owalo

“Since this was an application presented in my capacity as ... DG ... the final approval as set out in the ERP defaulted to the Director of Finance for approval.

“Given that self-approval by the DG would amount to conflict of interest, it is only practical that another officer in the rank of a director approves DG’s application. This is so because there is no other person to practically undertake operational responsibility above the rank of the DG. Indeed, the design of the authority’s ERP system took this into account long before I joined,” he says, denying that he approved his own mortgage application.

Mr Chiloba takes issue with the board for questioning the approval of his mortgage, indicating that for the Board to seek to approve would be to interfere with CA’s operational issues.

He, however, says that charge documents to his mortgage were signed by former CA Board Chair Gilbert Kibe as required under policies guiding the operations of CA’s mortgage scheme, and that the board was fully aware. He has accused the board of reaching a decision to suspend him without offering him an opportunity to be heard.

He further faults the audit process that culminated in his suspension as one that was flawed, with non-members of the board’s audit committee influencing and participating in drafting of audit committee report, which was presented to the Board and used as basis for disciplinary action.

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