Communication Authority of Kenya Director-General Ezra Chiloba Suspended Over Mortgage Loan Controversy

Why CA boss Ezra Chiloba was suspended
Why CA boss Ezra Chiloba was suspended
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In a development that has rocked the Communication Authority of Kenya (CA), Director-General Ezra Chiloba has been suspended due to allegations of conflict of interest. The suspension stems from Mr. Chiloba’s involvement in the approval of his own mortgage loan, which was reportedly overstated by almost two-thirds.

Mr. Chiloba is further accused of making a payment of Sh25 million to a company solely owned by him, essentially acting as both the buyer and seller in the transaction.

These allegations come in the midst of a separate case against Mr. Chiloba for gross misconduct, pertaining to his failure to address unpaid loans totaling Sh28.9 million and the understated loan balances of former CA employees who exited the organization.

An audit report on the management of a staff mortgage scheme sheds light on the reasons behind Mr. Chiloba’s suspension, revealing serious concerns about integrity and competence in the administration of a scheme that has disbursed over Sh662 million in loans to current and former CA staff.

The audit, initiated by the CA Board in May, conducted a comprehensive investigation into the scheme’s administration. It uncovers instances of abuse by former and current staff, resulting in potential losses amounting to millions of shillings. This abuse has occurred through the use of private valuers who inflated property values, leading to an additional Sh40 million in loans, mortgage payment defaults, and inadequate internal controls.

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The audit report explicitly recommends disciplinary action against Mr. Chiloba, primarily for his alleged conflict of interest. It states that in the 2022/23 fiscal year, Mr. Chiloba applied for and self-approved a mortgage loan for a property transaction with Mr. Jacob Simiyu Wakhungu, without subjecting the transaction details to higher authority scrutiny and approval.

Additionally, it is noted that Mr. Chiloba acquired a property of 7 acres, surpassing the one-acre limit set by the Civil Servants Housing scheme. The loan approval, carried out by a junior staff member, may not have undergone adequate due diligence, failing to address the relationship between the buyer and seller and the property’s size.

The report highlights a payment of Sh25,000,000 to an account held at Equity Bank in the name of Kitale Hilmost Ltd, based on the seller’s instructions. Further investigation revealed Ezra Chiloba Simiyu as the sole director and shareholder of Kitale Hilmost Ltd, essentially making him both the buyer and seller, potentially constituting an offense under Sections 41 and 42 of the Anti-Corruption and Economic Crimes Act.

The report suggests that these actions could reasonably be interpreted as an attempt to defraud the Authority.

While privately sourced valuers assessed the property’s value at Sh25 million, government valuers engaged during the audit process estimated its worth to be as low as Sh16.72 million, indicating an overvaluation of the property.

Furthermore, the report points out that as the Director-General, Mr. Chiloba serves as CA’s accounting officer, and his conduct and integrity have raised concerns about meeting the required standards.

Mr. Chiloba faces allegations of negligence of duty for CA’s failure to prequalify valuers and quantity surveyors in the management of the mortgage scheme, exposing the Authority to potential financial losses due to a lack of comprehensive management.

In addition to the suspension of Mr. Chiloba, the report recommends disciplinary action against CA’s Director of Human Resources for her role in causing a financial exposure of Sh29.9 million resulting from defaults in the mortgage scheme as of June 2023. The report also highlights the absence of prequalified valuers and quantity surveyors and the failure to establish a Comprehensive Policy Manual to guide the administration of the CA Staff Mortgage Scheme.

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