Ex-auditor at State oil firm ordered to return Sh5m in sacking row

An internal auditor at National Oil Corporation of Kenya (NOCK), who exposed tender malpractices at the parastatal, has suffered a double loss after a court ordered him to return Sh5 million that he had been paid for unfair termination of employment.

According to an order issued by Justice Mathews Nderi of the Labour Court last week, Mr Paul Masinde Simidi has been ordered to restitute the entire compensation sum of Sh5,644,317 paid to him by the parastatal.

The payment was pursuant to an order contained in a judgment of the Labour court dated November 30, 2015, in which Justice Linet Ndolo found Mr Simidi was constructively dismissed.

Mr Simidi resigned from the parastatal in July 2012 as an internal audit manager following an interdiction for leaking confidential information.

This led to a legal battle at the Labour Court where the judge ruled in his favour and awarded him Sh5 million in form of damages.

But the parastatal together with then Chief Executive Officer Sumayya Athmani Hassan lodged an appeal and the award was overturned by the Appellate court on December 6, 2019 in a bench that comprised justices Erastus Githinji (retired), Wanjiru Karanja and Martha Koome.

Application questioned

On the strength of the appellate court’s decision, the parastatal went back to the Labour court for an order to compel Mr Simidi to return the money.

The compensation comprised Sh3 million in general damages and Sh2 million for terminal benefits plus costs of the case and interest.

While directing Mr Simidi to return the money last week, Justice Nderi stated that although Mr Simidi was opposed to the corporation’s application to return the money, he admitted having been paid the decretal sum.

He had argued that the parastatal’s application had no basis in law and was fatally incompetent. According to him, the Court of Appeal neither expressly ordered him to refund the money paid and contractual terminal dues nor did it order him to refund the damages.

But justice Nderi re-produced the final orders of the appellate court which he said the effect was to nullify the entire award made by the lower court including the award of damages, terminal benefits, Certificate of Service and costs of the suit.

Contract terminated

Mr Simidi was employed by the State Corporation on a three-year contract with effect from November 1, 2009.

The contract was, however, terminated in June 2011 but the Board of Directors of the Corporation rescinded the termination at a meeting held later in the month and instead interdicted him.

His troubles with the parastatal started in 2010 when in the course of his duties, prepared and submitted an internal audit report to the Board Audit Committee.

In the said report, he cited the corporation’s non-compliance with the provisions of the Public Procurement and Disposal Act, 2005 and the Regulations with respect to procurement, receipt and inventory management of oil products and acquisition of petrol stations from Total Kenya Limited.

On March 25, 2011, he prepared and submitted another internal audit report to the Corporation's Board Audit Committee in which he highlighted an irregular payment of Sh967,260 to Reliable Concrete Limited.

He also highlighted other irregular payments to various contractors in the sum of Sh2,662,200 plus a further sum of Sh116,830 being retention money paid to Mass Petroleum Limited.

Warnings

Mr Simidi also raised the issue of contract variation at the rate of 187 per cent of the original contract on account of Prowalo Co. Limited.

Additionally, he raised the matter of lack of cost leadership in the Operations Department and a litany of alleged corruption cases within the Corporation’s establishment. He told court that on March 29, 2013 he submitted all the corruption cases to the Kenya Anti-Corruption Commission (KACC).

Two months later, he received a first warning raising accusations of breach of confidentiality and integrity, leakage of confidential/vital company information to unauthorised persons, revealing details of whistle blowers and breach of professional ethics.

He was also accused of victimisation of employees through reactive audits, witch hunting, intimidation of staff, abuse of office, threatening employees with punitive actions, causing fear and anxiety in the company and contributing to staff exists.

In June 2011, he received a second warning accusing him of unauthorised absence from the office.

He responded to this warning on and June 9, 2011, he reported threats on his life and recorded a statement at the Criminal Investigations Department (CID) Headquarters.

He also requested the Kenya Anti-Corruption Commission for protection as a whistle blower.

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