How broke Postal Corporation is letting prime land for a song

Seth Onyango @SethManex

Leasing of prime property belonging to the Postal Corporation of Kenya (PCK) is at the heart of the controversy over the renewal of the term of office for chief executive Dan Kagwe.

Documents seen by People Daily show the corporation has leased some 40 prime buildings and land to individuals in major urban centres across the country.

The bone of contention is the secretive nature of the deals, with most of the terms of lease coming well below the prevailing market rates.

The situation is compounded by allegations that some of the money from the leases is not finding its way into Posta coffers.

“We are seeing property leased and we do not know where the money is going… pensioners have not been paid and staff salaries delayed. There is a lot of criminal activity going on at Posta.

Managers need to be investigated,” said Communication Workers Union of Kenya (Cowu) General Secretary Benson Okwaro.

The union leader says the parastatal continues to suffer cash flow problems despite the fact that it had given out a lot of property to third parties.

In his reports, the Auditor General has flagged some of the property suspected to have been leased in deals that are shrouded in secrecy and thought to benefit some senior managers at the State corporation.

A spot-check of these assets show the tenants have converted most the property into hotels, kiosks and apparel shops, with those in downtown Nairobi being the worst affected.

In some instances, the branding of PCK in these facilities seems almost lost in the background.

At Tom Mboya post office, a new hotel has come up on the second floor of the building while another tenant has leased the ground floor for Sh150,000 a month and erected stalls.

According to audit reports, the tenant is raking in more than Sh1.4 million from the business, while at the City Square the former parcels holding area is now occupied by a hotel.

At the building overlooking Central Bank of Kenya and next to the Technical University of Kenya, a buzzing restaurant is operational on the ground floor occupying almost three quarters of the space.

In the same building, a couple of offices have been leased out to accountants and  lawyers while a sizeable chunk houses the Huduma Centre.

Land dispute

The auditor has also pointed out that Posta has leased a prime parcel of property at Yaya Centre in Nairobi Kilimani area for a song.

A tenant, who is said to be a former Postmaster General at the corporation, is reportedly paying a meagre Sh250,000 a month for the property.

The 5.03 acre land located on Argwings Kodhek Road was once the subject of a dispute between Wagon Park Ltd and Posta.

Posta had initially offered to sell the property to Bharti Airtel International for Sh500 million before Wagon moved to court seeking to block the sale.

The report points out a number of concerns including some cases where “occupancy of the assets was done without formalisation of the lease agreement or payment of initial amounts approved”.

The audit report also raises concerns of conflict between management and the board “due to leasing of corporations assets without approval of the board.”

Post Master General Kagwe has defended himself over accusations of mismanaging the corporation’s property saying they were given out well before he joined the parastatal.

He distanced himself from the allegations asserting that contrary to the claims, he grew the revenue from those assets which are worth Sh15 billion from Sh40 million to over Sh250 million annually.

“Some of these things which are being said happened when I wasn’t even there…now we are even able to pay salaries from these assets,” he said.

By yesterday, however, Posta employees were yet to be paid.

But insiders say though Posta had leased some of its property before he took over, the business accelerated during his tenure.

In a letter to Ethics and Anti-Corruption Commission in October 2 last year, PCK stakeholders urged the anti-graft agency to investigate Kagwe over the leasing scandal involving the Yaya Centre property.

Other leased properties are in Nairobi West, Tom Mboya, Rumuruti, Kisumu, Mombasa, Karatina, Isiolo, Garissa, Eldoret, Garissa, Timau, Naromuru, Naivasha and Maragoli.

People Daily has established that Posta at least 450 offices across the country and some 31 head post offices.

On Kenyatta Avenue and Ronald Ngala in the capital, PCK has rented out to businesses, mainly in hospitality and clothing business.

It is said rates here go for between Sh20,000-Sh200,000 depending on size of lease space.

According to the audit report, in Eldoret, the corporation has leased out an asset measuring 27,000 sq ft to MK Changwany and Associates for Sh9.2 million for five years and are supposed to pay Sh1.4 million per month.

Mayfair Investment leased a property in Kizingo at Sh22 million for 10 years at Sh1.8 per month. Bernard Aguko and William Osewe leased property in Kisumu at Sh17 million and pays Sh1.4 million monthly.

Crater Centre also lease an underdeveloped space measuring 500 sq ft at Nakuru Post Office for Sh33 million and is paying Sh3 million per month.

In Kiambu, Kagwe is accused of settling a land dispute where a property owned by Posta was allegedly grabbed by a senior county official instead of letting the law take its course.

“Kiambu plot grabbed by governor was resolved under a closed-door meeting between the official and the PMG,” the report reads.

It further states that most PCK properties are currently leased for over 10 years thus exposing them to risk since land that remains utilised/leased/occupied by a squatter for over 10 years can be repossessed or reallocated.

In the same county, Posta has reportedly leased out another prime plot adjacent to the bus station in the form of stalls that go for Sh10,000 each.