Damning audit points to fraud at Kenyan CMOs

The objective of the investigation was to review the operations, systems and internal controls of the Music Copyright Society of Kenya (MCSK), the Kenya Association of Music Producers (KAMP) and the Performance Rights Society of Kenya (PRISK).

The audit was conducted by the Ronalds LLP firm and covered the 2017-19 period. It found that the three CMOs are at serious risk of misappropriation of funds, civil and criminal liability, and loss of income from penalties and sanctions.

This is based on a number of issues it found, including negligence, diversion of royalties, fraudulent transactions, ghost and duplicate members, non-compliance, poor corporate governance, and policy breaches, among others.

The three CMOS have now been given seven days to formally respond to the findings.

"The board of directors of KECOBO is scheduled to hold a special meeting within the next two weeks to determine specific actions on the audit findings," KECOBO board chairperson Mutuma Mathiu said.

"The board is looking at several options in [the] implementation of the results of the audit report including reference to the Criminal Investigation Department, recovery of lost property and further administrative, policy and structural reforms in the CMO sector once we receive the mandatory response from the CMOs thus completing the audit report."

KECOBO executive director Edward Sigei said the provisions of the Copyright Act and other laws would "guide the actions of the KECOBO board of directors with regard to the implementation of the final forensic audit report."

In February, KECOBO allowed the three CMOs to jointly collect royalties on behalf of creators for six months and deposit all moneys into a KECOBO-controlled bank account pending the results of the forensic audit. The CMOs' collection period ended in August.