While he was PM, he directed removal of Kencargo, which was always profitable and replaced it with his company Astral Aviation Limited leading to a 2 billion loss.
According to an audit report released by consulting firm Deloitte, the shutting down of KQ’s cargo unit was made irregularly leading to a major loss that ultimately contributed to the financial woes that have threatened to cripple the airline.
Kencargo International Limited (KK) was the cargo unit of KQ that was shut down in 2004 despite the fact that the unit had continually recorded a high profit.
After the shutdown, the cargo services were outsourced from a rival company – Astral Aviation Limited that is associated with the ODM leader.
A report published by The Standard indicated that Odinga was the Chairman and shareholder of Astral Aviation Limited (AAL) upon its registration.
The report names the current shareholders and directors as Anwar Majid Hussein, Shashikant Gadhia Shareholder, Raila Junior Odinga and Amman Basin.
The audit reports noted that there was a conflict of interest in AAL’s dealings with the carrier given that the family of Gadhia had shareholding with KQ.
Once AAL became the national cargo carrier, KQ would pay for services provided by AAL while at the same time, AAL paid the airline when they needed the airline’s services.
The report notes that the business transactions were flawed as AAL charged KQ an extra fee for services it rendered, at the same time, KQ’s services to AAL were billed significantly lower than the market rates.
“This resulted in a total cost for KQ amounting to more than Sh400 million over the period 2006 to 2015, in billing charges by AAL,” the audit report cites.
On Sunday, Odinga, through ODM communications director Philip Etale, distanced himself from the KQ cargo scandal adding that he would issue a comprehensive statement on Monday.