The Kenya Broadcasting Corporation (KBC) will pay US$1.7million in legal fees for the fiscal year 2021-22 following a 13-year court battle that threatens to bankrupt the state broadcaster.
The National Treasury’s Supplementary Budget included the allotment in the previous week, amounting to more than half of KBC’s yearly recurrent expenditure.
A total of US$877 544 was transferred from recurrent to capital expenditures in the budget, with the company getting an additional US$1.2 million in allocations.
“The increase is mainly on account of the additional US$1.7 million provision for legal costs in relation with arbitration proceedings arising from a KBC Channel 2 court case,” Treasury said in a statement.
A further US$ 339 609 was set aside for employee emoluments, with US$ 346 630 coming from donors going towards the Kenya Yearbook.
The cost of the US$1.7 million arbitration has brought attention to the risk that the vital State agency poses to taxpayers due to a 13-year legal battle that might result in billions of dollars in losses.
The case, which is currently under arbitration in London, was flagged by Parliament’s Budget and Appropriations Committee last year as one of the risks to taxpayers.
“The committee also noted that the Kenya Broadcasting Corporation is being sued in London, UK, for terminating a contract it had with Amjam TV, which later absorbed the British Virgin Islands,” stated the Budget and Appropriations Committee in its report.
The dispute dates back to 2009, when KBC abruptly terminated a joint venture agreement with Dubai-based businessman Ajay Sheth, owner of Channel 2 Group, preceding billions in income and expenses sunk into the joint venture.
According to court filings, KBC and Channel 2 formed a joint venture in 2006, where the State broadcaster would provide technical equipment and the latter providing staff, programming content, and resources to the new digital station.