How Kenyans Lost One Billion Shillings At The Micro And Small Enterprises Authority (MSEA) Under CEO Henry Rithaa  

The letter to the EACC reveals how under Mr. Rithaa’s stewardship, hundreds of millions of shillings of public funds meant for the Constituency Industrial Development Centers (CIDC) Program cannot be accounted for. It is estimated that a whopping Ksh. 800 million of funds meant to spur the growth of MSEs by identifying available resources and materials at the constituency level that can add value for more significant economic benefit, disappeared into thin air

The Chief Executive Officer at a State Agency, the Micro and Small Enterprises Authority (MSEA) Henry M. Rithaa is facing serious questions from the Ethics and Anti-Corruption Commission over allegations of financial mismanagement, money laundering and abuse of office.

Well-placed sources at MSEA showed The Weekly Vision a copy of a letter addressed to the EACC that was signed by a section of board members claiming that Mr Rithaa has been handling daily affairs at the state corporation with arrogance, intimidation, and threats with the support of former Cabinet Secretary Peter Munya.

The letter to the EACC reveals how under Mr. Rithaa’s stewardship, hundreds of millions of shillings of public funds meant for the Constituency Industrial Development Centers (CIDC) Program cannot be accounted for. It is estimated that a whopping Ksh. 800 million of funds meant to spur the growth of MSEs by identifying available resources and materials at the constituency level that can add value for more significant economic benefit, disappeared into thin air.

The letter speculates that the looted funds may have been channelled to the Azimio Coalition’s 2022 general elections campaign kitty. The CEO and his close advisers have now embarked on intimidating the auditors who discovered the huge loss. Some board members who are alleged to have requested that the CEO account for the project cash were also not spared by the CEO’s arrogance.  Despite Mr Rithaa’s claims that 180 CIDC projects were renovated, he can’t provide any information on each project.

The Board has put him on task to provide the specific project description and activities, specific expenses on each refurbished project, respective project reports, period of implementation, project completion levels/percentages, and details of the contractors engaged by the Authority, but he has failed to do so. It has emerged that a few of the projects that were implemented were arbitrarily awarded to the CEO’s cronies and business partners who ended up doing shoddy work.

Investigations further show that over the years, cash intended for particular SMEs and other parties has not been distributed to or received by the intended beneficiaries. Records, however, have been created fictitiously, and fraudulent payment and cash-transfer paperwork have cleared the accounts in the name of the recipients. Additionally, it was discovered that the majority of the monies allocated for the purchase, distribution, and training of MSE-specific machinery and equipment, such as cold storage and vehicle washing machines, were lost in murky ways.

Investigations also show that the CEO has been openly discriminating when allocating projects to various areas, treating the organization like his personal property. Tasks have been distributed to areas depending on tribal and political affiliation. In the lead-up to the 2022 general elections, the CEO gave orders that the distribution of car wash and other equipment to recognized MSEs should be distributed out in particular regions especially in Meru to please former CS Peter Munya. The distribution of the equipment was predominantly cantered in the Nyanza and Meru regions, according to the documents that are now available. Although Mr Rithaa was given a clear framework for project identification and distribution, he disregarded it for political reasons, chose a small group of preferred staff to work with, and chose projects that were focused on regions connected to him and the then-CS Munya. The letter to the EACC alleges that the millions paid to Rithaa’s cronies disguised as contractors would openly find their way back to him in the form of bank deposits, MPESA transactions, and cash hand-outs.

According to other reports, the CEO is unable to explain how more than Ksh. 50 million was spent on a foreign vacation with his friends and a female non-staffer. Records reveal that the CEO travelled to Mwanza, Tanzania, for a trade event intended to introduce some of the MSE representatives and highlight significant developments in the MSE. The trip turned out to be a cash cow for the CEO and his cronies and known girlfriends within and outside MSEA.

The source divulged that the money was wired from MSEA bank accounts to his preferred staff and non-staffers. However, some of the representatives of known MSE, who were listed as having received hundreds of thousands, claimed they were not part of the Mwanza delegation. During the trip, the authority lost an additional Ksh. 20 million dished out in the form of hand-outs to the CEO and his cronies. Further, in December 2022, Mr Rithaa and the same clique of his preferred staff, consistently drawn from the CEO’s office, accounts, business development, procurement, and strategy departments, hatched a plan to reward themselves during the EAC Trade Fair held in Kampala by initiating massive procurements without following due process.

Over Ksh. 20 million was siphoned from MSEA through this scheme, and the value derived from these trade fairs is minimal compared to the monies spent. Investigations further reveal that the CEO and some of his preferred office friends, especially the Director of Corporate Services, Director of Strategy, and some junior staff, are always on Imprest, even on days when they are not physically in the office. It has become an open practice for the staff accompanying the trips to draw huge sums (an average of Ksh. 500,000) of unapproved imprests disguised as logistics and local running expenses. The amounts are never accounted for, as the officer enjoys the protection of the CEO.

It has also been discovered that the CEO has been using exhibitions and fairs in and out of the country as a channel for looting public funds. The CEO has never tabled before the MSEA Board any reports on the high-capital programs and exhibitions sponsored and facilitated by the Authority. Another program where millions have been lost is through the refurbishment of MSE’s premises and power connection. Reports indicate that some of the MSEs have not been connected to power, yet reports indicate that all the payments were settled upon completion of the projects. In a case of abuse of office, the CEO has been hiring staff without following due process.

 Recently, he recruited 27 employees, 15 of whom were from his home county of Meru. Investigations reveal that there was no board approval, no advertisement, and no recruitment process at all. When a section of board members learned of it and questioned his actions, he threatened to initiate a process for their removal by the current Cabinet Secretary. He has, however, invoked the names of CS Checlugu and PS Susan Mang’eni as having initiated the recruitment of the 27 staff members, and the majority of those recruited were recommended by the CS and the PS.

Investigations further confirmed that the CEO recently promoted 30 staff members unfairly and without merit. The decision to promote was neither deliberated nor ratified by the board. To ensure that his actions are not queried by members of the board, the CEO has ensured that the board is divided and never speaks in one voice. Already, he has brought to his side three board members, while those with divergent opinions are threatened that the CS is considering disbanding the board. He openly brags that he enjoys the protection of senior and well-placed officers in all of Kenya’s investigative and oversight agencies, including Parliament. 

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