An audit report has revealed that the wife of former Uchumi Supermarkets CEO Jonathan Ciano was among the retailer’s biggest suppliers. Despite the conflict of interest, and her being found to have over-invoiced the retailer, she was allowed to continue supplying the supermarket.
The KPMG’s Factual Findings Report further notes that Mr Ciano, who is one of Kenya’s most celebrated turnaround CEOs, failed to disclose that he was related to the fresh produce supplier. KPMG says Ciano’s spouse was a director at Eliehon, based on Registrar of Companies records and her identification card found on the former CEO’s official computer.
But when this information was presented to the security manager, he instructed that the matter be “put to rest and no further action needs to be taken on the staff concerned”.
The audit, which has been kept top-secret since December 2015, was commissioned by the retailer’s board. It lists Ciano and his former chief finance officer, Chadwick Okumu, as some of the people with a case to answer, alongside three other employees. The board dismissed Ciano and Mr Okumu in June last year on allegations of fraud and misconduct.
The audit adds that 46 per cent of procurement staff did not meet the minimum qualifications set in the retailer’s human resource manual. Further, from November 2013, the Uchumi board had six members, who included Ciano and five other directors.
“The three committees of the board, therefore, had common members, and due to the small size of the board, matters discussed in a committee were known to more than half of the full board,” the report notes.
Though a lean board had its advantages, including flexibility and saving costs, its downside was that it exposed members to conflicts of interest and denied them independence. “We found instances where the board and its committees failed to get adequate and accurate information on management activities,” the report said.