Court orders audit firm KPMG to pay ex-boss KSh379M for illegal sack

KPMG has suffered a blow after the High Court ordered the firm to pay its ex-boss KSh379.03 million for unlawful sacking in 2017.

Delivering his ruling, Justice Francis Tuiyott upheld a decision of an arbitrator who said that compulsory retirement for Richard Boro Ndung'u was unlawful.

Justice Tuiyott, however, reduced the compensation from KSh504.8 million which the arbitrator, John Ohaga, had awarded to KSh379.03 million.

Upon his sacking, Ndung'u was the head of KPMG East Africa head of tax and corporate services.

The genesis

Mr. Ndung’u was on October 3, 2016 summoned to the office of then CEO Josphat Mwaura at ABC Place, Westlands, for allegedly having an inappropriate relationship with his personal assistant.

According to court documents, an anonymous complaint was lodged with the respondents (the audit firm). The complaint concerned some alleged impropriety on the part of Ndung'u.

"Apparently the complaint was found not to be without merit and ultimately by a resolution of 13 January 2017 the Applicant [Ndung'u] was removed from the partnership and membership of the Respondent firms.

Mr Ndung’u later moved to court demanding $8.2 million which was the expected earnings from 2017 to 2024 when he would reach his retirement age of 60, among other damages.

He accused his former employers of unfair removal from office, intimidation, and been a target of false accusations. The High Court directed the matter to be heard by an arbitrator.

The arbitrator awarded Ndung’u a total sum to a tune of KSh460.5 million and a further KSh1.9 million in special damages. Ohanga also indicated that the award would earn interest at the rate of five per cent per year until KPMG settles the amount.

However, discontented with the arbitrator’s ruling, KPMG moved and filed a case in the High Court, leading to this latest ruling.

Justice Tuiyott overthrew the KSh35.5 million primarily awarded to Ndung’u by the arbitrator. The judge also reduced special damages by KSh661,430 and aggravated damages of KSh2.7 million.

The judge noted that although Mr Ndung’u had not issued a formal notice of his intention to retire, he had given that indication in at least two association meetings.

KPMG has the right to move to the Court of Appeal.