GDC boss sucked into fresh scandal linked to top staff

Geothermal Development Company (GDC) managing director and CEO Johnson ole Nchoe has been sucked into another scandal at the company after it emerged that he irregularly approved a Sh20 million mortgage scheme for an employee who did not qualify.

Interestingly, the GDC boss made commitments to have the company repay the bank loan using public funds without deducting the amount from the employee’s monthly salary.

SINGLE TERM

Documents in our possession show that Mr Nchoe allowed Simon Cheruiyot, GDC Human Resources and Administration General Manager, to access the mortgage facility well aware that it was not in line with the public service policy and guidelines.

This is because, by the time Mr Cheruiyot was applying for the mortgage in November 2017, the agency did not have such a facility in place for its employees.

Still, the company does not have the facility and, if it ever existed, Mr Cheruiyot would not have qualified as he is on a four-year contract at the GDC.

Mr Nchoe was not available for a comment on the story as calls and text messages to his number went unanswered. According to the public service policy and regulations, mortgage facilities, where available, are only accessible to permanent and pensionable employees and not to contracted government employees.

However, MPs, elected after every five years, have access to a Sh20 million mortgage facility under special arrangements payable within the five years of service in a single term.

A section of the GDC board members has already lodged a complaint with the Directorate of Criminal Investigations (DCI) demanding a thorough investigation into the matter.

PUBLIC COMPANY

Documents filed at the DCI and seen by the Sunday Nation show that Mr Cheruiyot procured the mortgage from Kenya Commercial Bank (KCB) while using his position to tamper with the internal administrative structures at the public company.

“This transaction reveals a pattern of fraud and abuse of office within the high chain of command in the GDC where senior officers create ad hoc administrative systems and procedures to confer financial advantages on selected people,” one of the documents filed at the DCI reads.

“This constitutes acts of corruption that your esteemed office should investigate.”

The documents further show that Mr Cheruiyot applied for the mortgage on November 30, 2017, and the application was approved a day later on December 1, 2017, raising suspicion on the speed and urgency of the approval.

Though the then Human Resources Manager in charge of payroll endorsed the application as eligible, the loan sailed through despite the General Manager in charge of Finance not approving the request, according to the information before the DCI.

SUPER SALARY

However, when the GDC board of directors, which former Kenya Revenue Authority Commissioner-General John Njiraini chairs, discovered the matter, Mr Nchoe tried to sanitise the suspect transaction.

The GDC Managing Director instructed KCB, through a letter ref GDC/MD/02/4a/RM/rm of September 2018, to convert the loan to a non-existent staff mortgage scheme. This means that GDC was committing to use public resources to pay for the loan on behalf of Mr Cheruiyot without no indication to have the funds recovered from his monthly salary through a check-off system.

It is also important to note that having been employed on a four-year contract, Mr Cheruiyot required a super salary to repay the Sh20 million within the four years.

Two days later, KCB wrote back.

“We advise that we have acted on your instructions. However, as discussed, harmonise the scheme agreement on clause 3.1 (iii) to include a letter in a manner that will expressly confirm that the loan is approved under the GDC mortgage scheme,” the letter from KCB read.

YET TO ACT

Further, the bank also requested that the limit approved for Mr Cheruiyot and the persons authorised to sign the instructions from GDC (CEO) be included as well.

But even as Mr Nchoe approved the mortgage, GDC Audit, Risk and Compliance manager Godfrey Shitsama established that Mr Cheruiyot had breached the law and the company’s internal policies by acquiring the mortgage facility that did not exist.

“He should be held to account for abuse of office by accessing the GDC staff mortgage scheme before it was operationalised in contravention to the laid-down regulations and guidelines for staff house mortgage scheme,” Mr Shitsama said in an audit report of September 14, 2018.

The report would be presented to the GDC board audit committee for implementation. Interestingly, to date, the board is yet to act on the audit report of its internal auditors and is divided right down the middle over the matter.