Simeon Randinga joined Spencon as a janitor. He dreamed it would bring a better life.
Spencon was once one of the largest construction firms in East Africa. After years of financial trouble, two highly-paidBritish bosses were brought in to save it, but 18 months later the bosses had fled and hundreds of Kenyans had lost their jobs. An Africa Eye investigation reveals the inside story of how Spencon went bust.
In July 2015, two British bosses looked out from their new Nairobi offices over an empty patch of land and decided to build a golf green.
Andrew Ross and Steven Haswell hired a consultant from one of Kenya’s leading golf clubs. Trees were ripped up and replaced by bunkers and the smooth playing green was laid and nourished by a sprinkler system.
The depot outside Nairobi where Ross and Haswell relocated Spencon
“How cool is this?” wrote Haswell in an email home. “We’ll have chipping area, putting green, bunker and driving net.”
Ross and Haswell were in Nairobi on a rescue mission: to save the struggling Kenyan construction giant Spencon. They had been appointed as directors of the company by US investment firm Emerging Capital Partners (ECP), which had in 2006 and 2007 invested a total of $15m in Spencon – including $1.5m of British government aid money designed to boost the Kenyan economy and create jobs.
But Ross and Haswell did not succeed in saving Spencon. According to thousands of leaked company emails, messages, and documents obtained by Africa Eye, the two British bosses appear to have engaged in a pattern of highly questionable business practices as they tried to turn the company around. They now stand accused of allegedly working with a convicted criminal to defraud banks of millions of dollars, implicitly threatening to sell out business partners to notorious Kenyan gangsters, and making potentially illegal cash payments.
This is the story of the 18 months Ross and Haswell spent in charge of Spencon before the company went bust, leaving hundreds of Kenyans out of work, some already missing months of pay.
Nancy Ntinu, Spencon’s former head of HR, took Africa Eye on a tour of the now abandoned golf green built by Ross and Haswell.
“Having a golf course for a company that is insolvent, on the verge of financial distress, that just doesn’t add up,” she said as she walked on the overgrown putting area.
“It was a mockery for Kenyan employees to watch this lawn being watered on a daily basis because these two gentlemen wanted to play golf.”
‘We are going to lose this patient’
Spencon was once one of the largest construction firms in East Africa – a giant that employed more than 5,000 staff at its peak and boasted major infrastructure projects across seven countries. It was headquartered in a tall office complex in the Upper Hill neighbourhood of Nairobi with successful multi-nationals for neighbours.
But behind the scenes, Spencon was saddled with debt. In early 2014, ECP, the US firm which had invested $15m, took control of the construction company from its founders. In November 2014, ECP hired Ross – an engineer and business director who would assume overall control of Spencon. In April 2015 he was joined by Haswell – an accountant with experience of restructuring African businesses, who would run the finances. Haswell was to be paid $25,000 a month, Ross $30,000.
Their job was to turn around Spencon’s fortunes so that ECP could sell it by the end of 2016. They had just 18 months. With the business already on the brink, it was never going to be easy, but the fate of hundreds of staff across East Africa lay in Ross and Haswell’s hands.
Wycliffe Ochieng, a 38-year-old, assistant mechanic, was one of those staff. Ochieng had found happiness in his work at the company. It had allowed him to rent a small home with his wife and young daughter in Nairobi, with running water and electricity, and he began to dream of a better life for his family.
When Spencon finally went bust, in November 2016, Ochieng found himself without work and in crippling debt. He was owed months of pay and he owed months of rent.
“He used to buy us things, like shoes and clothes,” recalled his wife, Lynet. “Some of things he did for us when we lived in town are different compared to now.”
Now the family lives in a small hut on Ochieng’s parents’ property, 230 miles (370km) from Nairobi. They have no electricity and no running water. Ochieng shares a bed with Lynet and their young daughter, and works the land to feed them as well as he can. Some days he barely eats at all.
“I used to take care of my family like a man should,” he said, dejectedly, when Africa Eye visited him there last year. “It has really brought down my self-esteem.”
Back in July 2015, Ochieng was arriving at Spencon for his first day as an assistant mechanic, blissfully unaware that the firm was already in serious trouble. Shortly after Ochieng started, Andrew Ross promised the staff that no one was going to lose their jobs, he said. But an email sent in April by Steven Haswell shows he was already worried.
“I think we are going to lose this patient!” he wrote. “We have 4 months of cash left … It’s not looking good.”
The two bosses cut costs by July, making a round of redundancies and relocating Spencon from its upmarket Nairobi headquarters to a dusty out-of-town maintenance depot owned by the company, where simple pre-fab workshops were converted into offices.
But they also started spending.
A week after the move to the depot, Ross and Haswell paid $70,000 for their own company cars – a Range Rover and Volkswagen Touareg. Haswell told Africa Eye the cars projected an image of an organisation of substance rather than one close to insolvency. Ross said the vehicles were deemed appropriate by the board. But staff were not impressed. “It was a lavish expenditure,” said Spencon’s equipment manager, Mike Hyland, who arranged the purchase. Dickens Omollo, the head of security at the depot, was taken aback by Ross’s Range Rover. “We wondered – this is a lot of money, and we don’t have money, and he is saying he wants to bring this company up?”
Ross and Haswell also got to work on their golf green. The head groundsman they had hired from one of Kenya’s leading golf clubs set about designing the plush practice area – complete with two bunkers containing 120 tons of sand.
The two bosses told Africa Eye the golf course was built at negligible cost using Spencon staff and equipment, and projected a positive image of the company.
Simeon Randinga, a janitor at the firm, felt the course was off limits to ordinary staff. “The golf course was out of bounds for the rest of us,” he said. “It was theirs alone.”
Ross and Haswell told Africa Eye the green was open for all the staff to use.
Fire sale
Getting a job at Spencon had meant the world to Randinga. He was newly married, and had begun to fear his wife would leave him if he could not provide for her. The regular income from Spencon eased his fears, and after a few months of work his wife moved to Nairobi to join him, and they had a child.
Then in mid 2015, Randinga noticed something that worried him, he said – the company appeared to be selling off perfectly good equipment alongside scrap and redundant machinery.
“When they were selling those things, I asked, ‘These are very good things, why are you selling them? Are you sure we still have our jobs?’.”
The man behind the sales was Tony Sanghani, a security consultant hired by Ross and Haswell. As well as security, the two bosses tasked him with a fire sale of Spencon equipment. They would later say they had no idea Sanghani was a convicted criminal. A simple Google search shows that he and his brother were sent to prison in 2002 for inciting their own company security guards to assault two men.
Mike Hyland, the Spencon equipment manager, was convinced Ross and Haswell knew. “I’m 100% certain they did,” he said. “I told Andrew Ross when I resigned, you know you were dealing with a criminal.” According to Hyland, Ross replied: “We have to do what we have to do.” Ross denied knowing about Sanghani’s record or replying in that fashion.
Leaked emails show Sanghani had the two boss’s full backing to sell assets. “Please all help and support Tony convert the old equipment and spare parts into cash,” wrote Haswell in an email to staff in October 2015. “Please ensure Tony is given full support,” wrote Ross in a separate email.
As Randinga and other staff at Spencon grew concerned about their jobs, Sanghani was taking home a huge salary and living in a free serviced apartment with a car and driver, with the promise of cash bonuses on top of his pay for delivering on the equipment selloff.
“It seemed to be a clearance sale completely, assets sold at giveaway prices,” said Kabiito Karamagi, a receiver appointed after Spencon went bust to look into sales made by Sanghani in Uganda. “What we found was a gross under valuation.”
The proceeds from those sales should have gone to paying off the firm’s bank debts in Uganda, but the money was instead deposited into Sanghani’s personal account.
When a member of Spencon staff emailed Haswell querying the arrangement, and asking if it would present the company with legal issues, Haswell replied: “It’s ok… we can pay to Tony’s bank account.”
Karamagi, the receiver, questioned how the money had been accounted for. “It’s certainly most unusual that these monies are not banked on the company account, but on an individual’s account. It is most unusual,” he said. “It smacks of fraud.”
After Spencon went bust, the administrators – international accounting firm PWC – discovered Sanghani had been paid $20,000 a month by Ross and Haswell, plus up to 25% commission. PWC called the amount “outrageous” in the context of Spencon’s financial position.
PWC also discovered a huge black hole in Spencon’s books – at least $1.6 million had not been accounted for. According to Karamagi’s calculations, the amount missing may be even higher.(BBC)
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