Kenya Railways in fresh tussle with Chinese firm the control of SGR Billions

Stand-off caused by massive fraud at SGR

Madaraka Express

The battle for the control of SGR Billions has resulted in a fresh tussle between Kenya Railways Corporation (KRC) and Chinese Operators of Madaraka express plying the Standard Gauge Railway.

The stand-off was triggered by reports of massive fraud in ticketing with billions going to pockets of individuals in one of the many scandals that have painted Kenya’s largest infrastructure project in bad light.

Kenya may have also been arm-twisted in the deal with China Road and Bridges Corporation setting up a secret Company Africa Star Railway Operations Company to manage the key revenue stream and demanding billions from taxpayers.

KRC wrote to the Chinese operators in February demanding to take over the ticketing system and curb revenue leakages.

Under the current arrangement, the Chinese operator is only required to bank collections and file returns, leaving KRC in the dark yet still demanding billions from the taxpayer.

Investigations hit a snag after the Chinese Corporation reportedly remained unresponsive to formal engagements on the issue.

According to Nation, a report signed by KRC board chairman “KR should put in place a system that interacts with the operator’s ticketing system for purposes of monitoring and reconciliations on a daily basis.”

Massive fraud

So severe was the fraud that several employees of Africa Star including Chinese and Kenyans – were arrested in November last year and charged with trying to bribe detectives investigating the scam.

The scheme involved the cartel of insiders manipulating the booking system and splitting revenues with the operator.

It also involved creating fraudulent refunds for tickets already issued to passengers on board the four trips between Nairobi and Mombasa.

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