The Auditor General has confirmed that state media firm, Kenya Broadcasting Corporation (KBC), is fighting a silent London arbitration case against another company that demands claims of KSh 300 billion, almost twenty times larger than the broadcaster’s total assets of KSh 17.5 billion.
- •If the tribunal rules against KBC, the corporation mired in financial losses and gross mismanagement, will be unable to pay thus leaving taxpayers exposed to a generational financial burden.
- •The case stems from a 2006 joint venture with Channel 2 Group Corporation, which KBC terminated three years later, triggering a multi‑billion‑shilling claim for lost profits.
- •The arbitration involves three massive claims: US$481.9 million (KSh 62.4 billion) for lost profits from KBC 2 between 2009 and 2017, US$241.8 million (KSh 31 billion) for projected future profits from 2018 onwards, and USD 1.64 billion (about KSh 211.5 billion) tied to the sale of an expanded joint venture.
“The profits for the joint venture were to be distributed between KBC and Channel 2 Group corporation in the ratio of 7:3,” Auditor General, Nancy Gathungu stated.
The audit also flagged KBC’s former board chairman also sat on the Channel 2 board and personally initiated the London case against the broadcaster, a conflict of interest never disclosed in official records. This dual role left the corporation negotiating against one of its own insiders, compounding the legal and financial peril for taxpayers.
Channel 2 Group is owned by Dubai businessman, Ajay Sheth. Under the deal, KBC was tasked with the supply of technical infrastructure (which constitute the station’s asset strength) while Channel 2 would provide staff, programming, and funding ahead of the digitalization of media.
At this time, KBC was under pressure to transform its position amid growing competition from private broadcasters who had outpaced the state broadcaster’s obsolete models.
Meanwhile, KBC is already carrying negative working capital of KSh 89 billion, unremitted statutory deductions, and decades of accumulated losses, leaving it dependent on government support.
In December 2023, the government fired acting KBC Managing Director Samuel Maina after he allegedly committed the state broadcaster to a US$5 billion arbitration payout without Treasury or Attorney General approval.
Maina had instructed Dentons UK Middle East LLP to offer the settlement to Channel 2 Group Corporation in the ongoing LCIA arbitration, prompting ICT CS Eliud Owalo to order his immediate suspension and disciplinary action.
