Former Mombasa Governor Hassan Joho photo

According to a special audit report from the Auditor-General, the then-acting managing director of Kenya Railways Corporation (KRC) forged board decisions in order to award a contract on favorable terms to a logistics company connected to the family of former Mombasa governor Ali Hassan Joho in 2018. 


The deal was for the operation of the taxpayer-funded inland cargo terminal in Nairobi.

After getting permission to set up at the Nairobi Freight Terminal (NFT), Autoports Freight Terminal Limited asked for concessionary lease terms like those given to Grain Bulk Handlers Limited (GBHL) when it was building its own facility in Athi River a few months earlier.

The company asked for a 45-year lease that would automatically renew, a lower freight rate of $450 per 60-ton wagon for ten years, waivers of stand premium and annual rent premium for ten years, and a 24-month termination clause.

But the KRC board decided to turn down these waiver requests. They said that only companies that built their own greenfield facilities were eligible for waivers, not companies that used terminal facilities that were already there.

The board determined that since NFT had already been built with public money, providing comparable rates for Autoports' operation at that facility and the GBHL-proposed rail logistics center at Athi River was not like for like.

The Auditor-General said that the board had approved the petition by Autoports, which was sent to the Transport Cabinet Secretary (CS) by the then-acting KRC managing director. 


This was a misrepresentation of the board's decisions, according to the Auditor-General.

A letter from the acting MD was sent to the CS for Transport on December 17 and was received on December 14 (Ref: KRC/CS/MD/3/388). 


The letter's contents led the CS to believe that the board had granted all of Autoport's appeal's requirements and was now asking for their approval. 


According to the Auditor-General's report, the CS did not send any official written communication in response to this request.

"The acting MD then sent a letter to Autoports (Ref: KRC/CS/MD/3/338) on the same day to tell them about a board decision and say that CS had given its approval despite what had actually happened."

According to the Auditor General, the special audit wasn't able to find out where the contract between KRC and Autoports came from or what the company had said about wanting to invest to make it easier for freight to move by standard gauge railway (SGR).

Also, according to the report, the Attorney-General gave legal advice on the transaction and said that KRC couldn't legally lease it without using the PPP Act's rules because it had already been built with taxpayer money and didn't need any more investment from the business leasing it.

Autoports has been putting pressure on KRC for months to grant them exclusive use of the Syokimau freight terminal, which is strategically placed next to the SGR terminal. This would shut out other companies and spark ferocious industry protests.

Competing logistics companies were against the distribution because they thought it would cost the government money and hurt merchants who had long-term shipping contracts with other logistics companies.

Autoports also made a special deal to ship freight from Mombasa to Nairobi at a discount of up to 80% for a period of ten years.

This goes against the corporation's tariff book's 10% maximum volume discount allowance.

Autoports gave the KRC a guarantee of 1.6 million tons, or 24,615 wagons, of business every year in exchange for the preferential rate.

Autoports should pay KRC Sh5.28 billion for the 24,615 wagons it agreed to move, but under the terms of the concession, it would only have to pay about Sh1.1 billion. 


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