Consultancy firm McKinsey and Company demanded to be paid in advance in order to provide services to Kenya Airways in a controversial contract that saw it earn hundreds of millions of shillings before it got down to work.
According to a memorandum seen by The Standard on Sunday, the firm was to earn at least Sh1.7 billion in the first 18 months of the contract as standard costs alone.
For the first three months, Kenya Airways (KQ) was to pay a fixed fee of $800,000 (Sh80 million) a month. This was to be charged twice a month, an arrangement that saw the airline part with at least Sh40 million every two weeks.
This was to happen between mid-November 2015 until February 2016. Afterwards, it was to earn $1,500,000 (Sh150 million) every month for the next six months beginning March this year.
It was then to scale it down to $500,000 (Sh50 million) a month for another 12 months. This brings the fixed charges to Sh1.7 billion in the first 18 months.
In that period, there were to be other charges such as performance fees that were not explicitly defined in the contract and which were to be calculated based on other metrics such the value of initiatives executed.
“This fee will be charged twice a month at the beginning and mid of each month. These payments are immediately due,” the contract adds.
The contract says that unless Kenya Airways had sufficient cash funds available for the whole time of their programme, the airline was to pay in advance.
“All invoices are payable within 15 days of issue. These payment terms apply in case KQ is in stable financial condition; otherwise section ‘cash advances and prepayment’ is applicable,” the contract reads in part.
www.standardmedia.co.ke
