NetOne’s Kangai Bought $1 Million Mansion amid Losses, Without Approval

Now Daily

Suspended NetOne managing director Reward Kangai ordered the bankrupt state firm to buy a house for him in leafy Borrowdale for nearly $1 million as the firm struggled with heavy losses under a mountain of debt and without approval, Now Daily can reveal.

The purchase has been condemned by state auditor-general Mildred Chiri, who hinted that fraud may have taken place as procedures were not followed. Chiri also expressed concern that the purchase was done without board approval, without adhering to authorisation limits and without any authorisation records being kept.

“The company acquired a property in Borrowdale worth US$800 000 during the year (2013). Stamp duty on transfer amounting to $57 865 was paid to Wintertons legal practitioners resulting in a total cost of $857 865,” Chiri said. “There were no records of internal authorisation by management or the parent ministry. The purchase price was paid in three instalments. The purchase of this property was approved by the finance director and the managing director for the purposes of residential accommodation. A deed of transfer was recorded in the company’s name.”

Chiri said there was a clear risk or implication that “fraud may go undetected”. She recommended that “management should ensure authorisation limits are adhered to” and that “internal authorisation records should be kept and filed”.

Chiri’s damning evidence will form part of the charges against Kangai, who was suspended for alleged corruption on 14 March 2016.

Kangai justified the unauthorised purchase.

“At the time of purchase of this house, there was neither a substantive board nor interim board,” Kangai said in a statement in response to the charges. “Executive management committee passed the resolution to purchase the house to replace the one used by the managing director as it has proved costly to maintain hence its procurement. Under normal circumstances, this should have been authorised by the board of directors. In their absence, executive management committee being the management committee available did resolve to purchase the property. At the time of passing the resolution, the managing director excused himself.”

NetOne recorded a massive loss of $4 841 276 for the year ended 31 December 2013 while its current liabilities exceeded current assets by an astronomical $82 million (2012: $5 942 859/$74 420 668).

Kangai has been sent on three months leave on full salary to facilitate investigations after fellow company officials accused him of intimidating and victimizing them over the inquiry.

© Now Media 2016. All Rights Reserved.


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