Kenya’s mainstream media is on the spotlight following reports that commercial interests won over media freedom after it failed to report the kick-starting of a parliamentary probe into East African Breweries Ltd (EABL) over claims of tax evasion, asset stripping and racism.
This is in relation to an affidavit by Kelvin Wanderi Kinyua who has petitioned the National Assembly to order forensic investigations into the beer giant’s financial dealings to protect local shareholders and safeguard public interest.
He has accused the company of doctoring its accounts to give a false impression that they are healthy, selling off various assets both at the headquarters and the depots and packing its top echelons with foreigners to the detriment of locals.
The petition was tabled in the National Assembly by Gem MP Jakoyo Midiwo and Deputy Speaker Joyce Laboso directed that the departmental committees on finance and labour take up the matter.
MPs, who contributed to the matter, expressed deep concern over the claims and said a proper investigation must be undertaken.
And now, according to Business Today , a respected online newspaper with a niche on media monitoring, the mainstream press deliberately chose not to report on the affidavit for fear of losing advertising dealings with EABL.
At least two newspapers are said to have killed the story (a newsroom euphemism for not using a story) following intervention from top editors.
We have also established that in another media house, the CEO gave instructions that the affidavit’s claims should not be given publicity.
In his affidavit, Kinyua had also sought that the Kenya Revenue Authority be required to assess the beer giant’s tax compliance.
According to the petitioner, EABL’s existence as a going concern in the short term is doubtful and the management has been engaging in ‘creative accounting’ to hide that fact from shareholders and Capital Markets Authority.
“For instance, the current assets of EABL as at June 30th, 2015 were valued at Sh25 billion against the current liabilities of Sh24 billion indicating possible cash flow and liquidity challenges. Indeed, despite the fact that, for the same period the non current assets were valued at Sh42 billion against non current liabilities of Sh28 billion, the company was experiencing liquidity problems leading to massive borrowing to finance other debts and hoodwink the regulator,” he says.
He also accused the beer giant of facilitating capital flight from Kenya, claiming its dealings with Diageo Plc have seen it transfer profits to the United Kingdom hence committing tax evasion.
The firm has also been disposing off its assets including land at its headquarters as well as the depots sparking fears it could be planning to scale down its operations in Kenya leading to job losses.
Money & Markets was among the few online outlets that picked up the story.(see our story on the scandal EABL probe here.
