Interior PS, state agency bosses caught in retirees' benefits theft saga
Dozens of former employees at a government agency in western Kenya are retrenched in a cross-government down-sizing plan.
Twenty years later, some managers of a state agency and top lawyers are accused of withholding retrenchment benefits won after the irregular terminations through fictitious court processes.
For the first time since the 2002 retrenchment, a Nation investigation has exposed how the scheme at the Lake Basin Development Authority (LBDA) was planned and executed.
Documents in our possession reveal a complex saga involving a string of lawyers and managers on the one end and tens of distressed retrenchees on the other.
The fate of at least Sh100 million is the subject of our investigation. Behind the explosive saga at the parastatal is principal secretary in the Ministry of Interior and Coordination of National Government, Mr Raymond Omollo, who at the time served as LBDA’s Managing Director, Mr Michael Okuk, LBDA legal manager, Mr Eliakim Owala, a Nairobi-based lawyer and a former employee at LBDA, Mr Joseph Musomba, a lawyer at Kulecho Musomba Advocates, Mr Clifford Otieno, a former legal officer at LBDA, Olel Onyango Ingutiah and Otieno Yogo Ojuro law firms in Kisumu.
It all started in 2000 when the government introduced a staff retrenchment programme to reduce the wage bill and the workforce in the civil service.
Between 2000 and 2002, state institutions sent home 25,783 civil servants on early retirement, including 171 employees at LBDA.
Mr Titus Komen, who was the human resources manager at LBDA in 2002, participated in the retrenchment process. He was later sent home too and sued the company and won.
In 2004, Mr Komen convinced the High Court that the retrenchment process was full of illegalities, and Justice Mohammed Warsame ruled in his favour. He was awarded more than Sh6 million. His case opened the floodgates.
In the subsequent cases, Justice Nduma Nderi stated that retrenchees were entitled to a golden handshake of Sh40,000, payment of two months' salary in lieu of notice, and a severance pay calculated at two and a half months for every year worked based on their monthly salary as of 1995.
Out of the 171 employees laid off at the LBDA, 108 of them had not sued the parastatal for twenty years. In February 2020, an out-of-court settlement in a case involving 108 employees was agreed upon, but the details were murky and unclear.
The first red flag was raised when a contact claiming to be a case beneficiary said he knew nothing about it. This led to suspicions that the case was made in the name of the retirees without their knowledge and that someone was about to pocket their money. It became clear during our investigations that the retirees needed to be made aware of the new development.
Mr Otieno, the former legal officer, said there was a conspiracy hatched in advance to defraud the retirees. The conspiracy he said, originated from the then Managing Director now PS Interior Raymond Omolo’s office.
According to Mr Otieno, The managing director had called for an urgent meeting between the acting legal manager Michael Okuk and Mr Otieno
“That money was not supposed to benefit the retirees. We were to get a lawyer to sue LBDA using the information we supplied him and earn kickbacks in return,” he said. Mr Otieno who was part of the initial meeting was eventually kicked out after he raised concerns about what was being planned. By then, he had compiled a list of the retirees.
The case was won in court, but the former employees were unaware of the petition in their name. The ruling ordered LBDA to file a computation of how much money each person was to receive, but LBDA has yet to return to court to file this computation.
Mr Omollo, the MD, approved the payments to Mr Owalla amounting to Sh81,459,992. The victims of this saga are difficult to find. Some have died and others only learned of the case by sheer luck.
Our investigations revealed no evidence that Mr Owala received instructions from his 107 purported clients. Some have never met Mr Owala and are unfamiliar with his face, office, or agents.
More than 20 people Mr Owala claimed to have represented in court were dead. Among them are Gideon Kipsigei Tanui (2002), Christine Adhiambo Obiero (2010), Immaculate Adhiambo Wasiama (2006), Erastus Auma Okode (2006), Lucy Anyango Onyango (2003) and Jennipher Uside Mbego (2015).
In an interview with Nation at the time, Mr Omollo denied any knowledge or involvement in the alleged fraudulent scheme.
Nation also presented the findings to Mr Okuk in Oyugis. He denied any knowledge of the fraudulent scheme. The scheme has caused many retrenched employees to flock to the LBDA headquarters in Kisumu to learn more.
After some of the retirees started asking about their benefits, LBDA began looking for the beneficiaries and paying them.
From Mr Owala’s family bank salary account, Sh50,000 was sent to several complainants to buy their silence. One of them, Mr Fred Obware Oduk was sent the incentive on May 26, 2020. Oduk has been paid Sh227,000 as of November 2022.
“He sent me the money and said he had taken about half of it for his fees and for a lawyer representing him in a case we have sued,” Mr Oduk said. Mr Maurice Calary Odero received Sh50,000 on May 14, 2020. He is demanding up to Sh1.6 million, an internal computation availed by Mr Omolo at the time, showing that Maurice was owed sh596,000.
Six victims have engaged the firm of Lugano Odhialo Advocates to uncover the secrets between Eliakim Owala and LBDA.
What is not clear is where Mr Owalla got the money to pay some of the retirees between March and July 2020, even though Mr Omollo wrote to the Treasury on August 14, 2020, requesting Sh152 million to pay current bills, including terminal dues, which were approved on August 25, 2020.
In November 2022, Mr Owalla told Nation team to speak to his lawyer Charles Ouma. Mr Ouma insisted that the 107 clients had instructed Mr Owalla to go to court on their behalf, dismissing their claim that they had been represented without their knowledge.
“He had instructions, there is no way he would go to court on his own motion.That would be a crime,” Mr Ouma said.
Mr Ouma was also unable to reveal the whereabouts of Mr Samuel Oketch Opondo, the man Mr Owala claims filed the case on behalf of other retirees, yet none of the 19 people we interviewed have ever met or spoken to Mr Opondo about the case.
Unlike Mr Owala, Kulecho & Musomba advocates had received clear instructions from 45 clients in 2018 to represent them.
The problem with the Kulecho & Musomba case, as with Mr Owala’s, is that the retirees also complain that the firm should have disclosed the amounts to which each of them was entitled.
Mr Samuel Oketch Atieno is the face of the case against LBDA filed by Kulecho & Musomba advocates. He worked at LBDA for 16 years. He said Mr Musomba is yet to specify the amount of money they should receive.
“He is not revealing what was paid to him. He has left us in the dark,” Mr Oketch said. According to Mr Omollo, Kulecho & Musomba advocates was paid about Sh30 million. The finance manager’s report to the board, however, indicated that the firm was paid Sh32 million, but the firm states that it only received Sh21 million.
The money was paid to a joint account owned by Kulecho & Musomba Advocates and LBDA lawyer Otieno Yogo Ojuro and Company Advocates; this raised questions on why the money would be wired to a joint account in a case solved by consent.
Only the LBDA’s lawyers deny that Sh32 million was wired to that joint account. If LBDA appealed the decision, how come the agency continues to say it paid Sh32 million two years later? When we took our investigation to Kisumu Law Courts in November 2022, we found no notice of appeal or file for any of the cases.
But Mr Yogo insisted that there was an appeal in the case, even giving what he said was the case number; “You can go check ELRC number 9 of 2020.” On perusing the court files, we found the number belonged to a case that had nothing to do with LBDA.
In their letter to the retirees, Kulecho & Musomba Advocates say, “We negotiated for you a second golden handshake.”
By indicating that there was a negotiation, the lawyers were implicating LBDA in the double payment conspiracy. All retirees had already been paid Sh40,000 each based on their own admission and on copies of the 2002 payroll in our possession. Mr Musomba does not deny the double payment.
“Consent is a compromise, an advocate who has the best interest of a company will not allow to cater for interests, or double payments or anything that puts the institution at a loss … it is a compromise,” Mr Otieno said.
“There was no double payment. We deducted what they had already received,” Mr Omollo said.
For retirees, all they want is their money. Nation Investigates has seen an internal computation that was neither filed in court nor shared with the retrenchees.
It needs to be clarified why the document or any other computation was never filed in court as ordered by Justice Nduma Nderi in February 2020.
The investigation into a well-orchestrated scheme to defraud former public servants of their final dues has not made significant progress and the victims are still waiting for help, with those who died yet to rest in peace.