MultiChoice in the hot seat over its 'unfavourable' deal with KBC
Business
By
Josphat Thiong'o
| Dec 18, 2023
MPs are considering the termination of a multi-million-dollar contract between MultiChoice Africa and the Kenya Broadcasting Corporation, citing it as an unfavourable agreement.
According to documents presented before Parliament, the two parties entered into a contract in 1994, allowing the national broadcaster to air international channels, while MultiChoice was responsible for providing content.
The detailed terms revealed that KBC held a 40 per cent stake in the agreement, while MultiChoice held the remaining 60 per cent. This initial agreement underwent a review in 1996.
As part of the contract, the national broadcaster was obligated to furnish equipment and infrastructure to facilitate Kenya's transition from analogue to digital broadcasting.
However, last week, members of the Public Investments Committee on Social Services, Administration, and Agriculture expressed concerns about the contract, saying the national broadcaster was receiving an unfair deal.
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The House team, led by Navakholo MP Emmanuel Wangwe, pressed the management of MultiChoice Kenya to explain why millions owed to KBC in dividends had not been fully remitted and questioned why the national broadcaster was excluded from the day-to-day operations of the organisation.
The committee also scrutinised the company's senior executives and requested an explanation for a dividend funds variance of Sh20 million.
"As of 2011, the dividends owed to KBC amount to Sh116 million, but according to audited books, the national broadcaster received only Sh96 million.
"Explain to this committee the glaring anomaly and clarify the purpose for diverting the funds intended for dividends," said committee vice chair Caleb Amisi.
"...based on our engagement with MultiChoice, we believe KBC is not receiving adequate value for money, and that is the reason for our presence here. We believe this agreement should be terminated unless MultiChoice considers a review to restore confidence on the part of KBC," added the vice chair.
However, MultiChoice finance director Ruth Omondi said all funds were indeed paid to KBC.
"I was not present at the time the deal was negotiated, and my responses are based on the records I have. Documents in our possession indicate that all the dividends were paid to KBC," she said.
The MPs, however, swiftly engaged in another confrontation with the firm's management, questioning why despite KBC holding a 40 per cent stake in the deal, it only had two out of five board members and lacked representation at the management level, hindering its ability to monitor day-to-day operations.
They also heard that during the actualiSation of analogue to digital TV transition, KBC was to provide on-ground equipment and frequency whereas Multi-Choice was to provide content.
Multi-choice legal representative Clare Ruto defended the firm, saying the change in content had been done in agreement with KBC after certain channels proved not commercially viable.
"We were a content provider and it was KBC's work to provide equipment. We have not moved out of the contract," said Ruto.
The management of Multi-choice is set to appear before the committee again with key contract documents.
jthiongo@standardmedia.co.ke