Reclusive Billionaire Kariuki in Trouble as Africa Spirits Crisis Spins Out of Control

Kenyan billionaire Humphrey Kariuki has largely avoided media scrutiny during his 30-year career, but that changed this year after numerous controversies including alleged tax fraud, the sale of substandard alcohol by a company he controls, and his dual citizenship (Kenya and Cyprus). 

He was thrust into the public limelight when Africa Spirits Limited was raided on suspicion of tax evasion. In February, the Directorate of Criminal Investigation (DCI) found smuggled ethanol, illicit alcohol, and 21 million fake Kenya Revenue Authority (KRA) stamps at Africa Spirit’s factory. Moreover, the KRA alleged that the company failed to remit $30 million in taxes. 

Matters got worse when the Director of Public Prosecution, Noordin Haji, ordered Kariuki’s arrest on August 8. At the time, Kariuki was travelling outside Kenya and was purportedly unaware of developments. On August 13, the media reported that Kariuki had stepped down as Chairman of the Janus Continental Group and on the August 19 he appeared in the Milimani Law Courts in Nairobi.

The Janus Continental Group is a holding company that has investments in e.g. The Hub (a premier shopping mall in Nairobi), Dalbit Petroleum (one of the largest oil distributors in East and Southern Africa), the Mount Kenya Wildlife Conservancy and Animal Orphanage, the Fairmont Mount Kenya Safari Club (a 5 star hotel in Nanyuki), as well as Africa Spirits.

Against this backdrop, we apply our crisis communications framework that is modeled around the 3Rs – Readiness, Response, Recovery.

Readiness

It appears that neither Mr. Kariuki nor the firms associated with him had a crisis communications plan in place. Crisis readiness ensures that there are assigned roles, talking points, media contacts, etc. before a reputation damaging event occurs. For instance, there should have been holding statements or a spokesperson in place to address allegations the moment news broke out in February. Or a spokesperson for Mr. Kariuki could have isolated him from being dragged into the crisis surrounding Africa Spirits. Finally, traditional media coverage about Mr. Kariuki, Janus Continental Group and Africa Spirits was scant which indicates a lack of a proactive reputation management program. The only significant piece was an interview by Forbes in 2017 that shed light on Kariuki’s background, investments, and foray into conservation. The piece ends with a quote from Kariuki who says he wants to be remembered for “doing my own bit in preserving Kenya’s wildlife.”

Response

A crisis communication plan establishes plans, protocols, messages and strategies that can be deployed quickly, if necessary. Yet in this case Kariuki and his investment firm chose to remain largely silent. A pop-up window on Africa Spirit’s website states that the KRA sealed its premises on January 31. This is also the last item covered in the ‘News’ tab of the website. Furthermore, we did not find any quotes given to the media by Kariuki, his lawyers, or officials of his companies. They egregiously let the media and officials from DCI, KRA and the Office of the Director of Public Prosecution dictate the narrative and drive the story. Mr. Kariuki finally broke his silence on August 19 when he proclaimed to have “no outstanding tax dispute with KRA” and that he does “not manage any company that has a tax dispute with the authority.” This statement will undoubtedly be met with incredulity, as will a statement by his lawyer Kioko Kilukumi that Kariuki flew back to Kenya one day before appearing in court after “after learning through the media that he had been summoned.” court. On August 21, Janus Continental Group posted a tweet to its 96 followers at the time which directed readers to a statement on its website. The firm did the same on its LinkedIn channel. This was the first time the channels acknowledged the incident. Additionally, a slightly longer statement was posted on www.humphreykariuki.com. This is the only content on the website which apparently is not indexed by Google as it does not appear in a search. 

 

Recovery

A successful reputation repair strategy should be high priority for Kariuki since he and the firms he controls need to rebuild trust. However, there is no reason to believe that much thought has been into this phase given the lackluster performance shown above.

Takeaway

Mr. Kariuki and the companies he controls were clearly not prepared for this incident. They either do not believe in proactive media engagement or simply opt to discard the repercussion of this crisis. However, the reputational damage is done especially in the Kenyan market. Business operations at Africa Spirits have been severely disrupted and any preexisting goodwill amongst stakeholders has probably evaporated. Collateral damage will be particularly bad for the Mount Kenya Wildlife Conservancy and Animal Orphanage through which Kariuki sought to shape his legacy. With legal proceedings just beginning in Kenya, there is a high chance that the international media will eventually cover the story. This will have consequences for Kariuki’s profitable companies like Dalbit Petroleum and Great Lakes Africa Energy.

Contacts us at info@sochin.agency for more information about our crisis communication practice.