Gitahi Gachahi was the Chief Executive Officer (CEO) of one of the best audit and advisory firms in the world, Ernst & Young LLP (EY) from October 2009 until June 30, 2020, when he retired.
Gachahi had managed to maintain a low profile until the Kenya Revenue Authority (KRA) published a list of the top taxpayers in the country in 2017, and uncovered more than 100 little-known billionaires, whose net worth appeared to have grown recently.
The taxman ranked the retired Ernst & Young CEO among high-net-worth individuals (HNWIs) with gross annual incomes of between Ksh350 million and Ksh1 billion.
DON'T MISS: Stay informed with the latest news and interact with us on Instagram.
Ernst & Young is one of the world‘s four biggest audit firms and counts Co-op Bank, the Central Bank of Kenya and Absa Bank Kenya among its clients. The Kenyan office falls under its Eastern cluster, which includes Ethiopia, Kenya, Uganda, Tanzania and Rwanda.
Gichahi left EY after a 30-year stint at the firm where he played different roles including as the regional tax leader as well as the people (HR) partner before becoming the chief executive.
During his stint at the helm of EY, the firm launched a fraud investigations and dispute services division, targetting a bigger share of the auditing market. EY sought to use the division to clinch more deals at a time fraud and white-collar theft is rampant within corporate entities.
At the time, Gachahinoted that the division would help its clients in detecting and curbing corruption within companies, which will in turn boost their profitability.
“Fraud within companies is a worrying concern for stakeholders globally and with this department, we should now help our clients detect and even prevent it,” he said.
According to EY at the time, Kenyan companies lost an average of 10 per cent per year in revenues to internal fraud. Gachahi added that corruption had become rampant amount corporates across the world, with business executives profiting massively off the vice.
JOIN US: Stay informed with the latest Kenyan news and join the conversation on Telegram.
In January 2021, Gichahi moved to court seeking an additional Ksh10 million from EY as part of his retirement perks. He argued in court filings that his retirement package was incorrectly slashed by Ksh10 million after the firm capped his pending leave days at 60 instead of 153 while Ksh2.8 million was docked from his pay as part of austerity measures to protect the company from the economic effects of Covid-19.
“It is worth noting that as is in the case of chief executive officers and chief operating officers, continuing partners have always been compensated for the days carried forward above sixty days when they eventually take them. So the days above 60 are not forfeited because work schedules do not allow to take prolonged leave,” he said.
“In addition to my leave days being capped at 60 instead of the 153 days, during the month of March 2020, the respondent (Ernst & Young) unilaterally decided to deduct Sh2,838,024 from my drawings over a three-month period.”
He claimed his attempts to have the company review his retirement perks failed despite writing several protest letters. He received a reference salary of Ksh28.63 million for 2020 when he exited the company.
A reference salary means the highest annual rate of base salary paid to an employee by a company at any time during the three-year period ending on the date of termination of a work contract.
“Despite the protests and without engaging me in the process, my reference earnings were reduced by Ksh10million,” Gachahi said.
The retired CEO demanded that Ernst & Young be barred from distributing its 2020 income among its partners, pending the determination of the case he has filed in court. In his application, he demanded that the consultancy be compelled to provide a financial statement showing how profits were distributed.
“That pending the hearing and determination of the application and this suit the honourable court be pleased to issue an order directing and/or compelling the respondent, its agents and or assignees to reinstate the claimant’s financial year 2020 reference earning to Sh47,750,000 for purposes of calculating the leave compensation and determination of his full annual compensation,” Gichahi said in an application filed through Mwagambo and Okonjo Advocates.
JOIN OUR COMMUNITY: Stay informed with the latest celebrity news on our WhatsApp community or by messaging the number +41774793952.