Standard Group is unable to pay staff members it is rendering redundant, we can exclusively report, and is in talks with a local bank for a rescue package.
A confidential conversation in an informal meeting between the Kenya Union of Journalists and the Standard Group’s Human Resource Director Pauline Kiraithe held yesterday promised that the affected employees will receive their dues in August 10. This is about a week late from the agreed payout date of August 5. Even then, payment on this new date is not assured.
Indeed, there is so much doubt about the payout that even the company Chief Executive Officer Sam Shollei skipped the crucial meeting. According to Mr Shollei’s communication to KUJ seen by Business Today, Standard Group management had committed to pay the redundant employees by end of August.
So serious is the issue that Mr Shollei, despite promising KUJ that he will make open the payout figures before the exits after agreeing on the compensation formula, this did not happen. “This raises the fear that some people might be shortchanged contrary to the agreed formula. No doubt, many may have been paid less than what they are entitled to,” said a source.
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“Although the CEO, Sam Shollei, promised to pay out monies to those who voluntarily opted out by end of last month, that has not happened,” says KUJ chairman Oscar Obonyo in a letter to other union officials after a meeting with Ms Kiraithe. “The management has also not honoured a follow up undertaking (copy of letter also available) stating that figures of the payout shall be made available to members before their exit.”
The pay delay, insiders fear, could be as a result of the financial quagmire the Moi family-run media house finds itself in. “The media house was expecting a ‘soft’ loan from a commercial bank but it seems there were some unforeseen hiccups which translated to a delayed payout,” said a reliable source familiar with the company’s finances.
The redundancy, according to experts, will cost Standard Group about Ksh100 million, which is about 30% of the firm’s 2014 reported profits. Standard Group reported a pre-tax profit of Ksh300 million in the last financial year, a figure financial experts claim could have been massaged.
For some time, the company has been struggling to make money, with most of its products, with the exception of The Nairobian, a weekly tabloid, recording drops in earnings. Media companies in Kenya are facing tough times as social media platforms, defamation cases and digital migration eat into their earnings. This week, the region’s biggest media house, Nation Media Group, reported a drop in half-year profits of Ksh130 million.