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Corporate Fraud

Forensic audit exposes fraud at MCSK, KAMP and PRISK

Music Copyright Society of Kenya (MCSK), Kenya Association of Music Producers (KAMP), Performers Rights Society of Kenya (PRISK) are collective Managament Organisations (CMOs) that are contracted to collect royalties on behalf of performers.

An audit of the three organisation that was ordered by the Board of Directors of Kenya Copyright Board (KECOBO) for a three year period starting 2017.

The forensic audit conducted by a Ronalds LLP has exposed fraud in the organisations.

“The Chairman noted that the preliminary findings of the Forensic Audit raised the following notable issues amongst them: diversion of royalties; Poor Corporate Governance and separation of roles…”, the press statement released by KECOBO today said in part.

Over the years, artists and perfomers have been vocal about the measly royalties check they received from especially MCSK.

In August 2019, Kenyans woke to reports that MCSK had sent out an average of Sh2500 as royalty for the year to several Kenyan artistes.

Khaligraph Jones’s response

The CMO had been placed under two-year freeze by the regulator KECOBO and only received a new license in January 2019 with a restructuring that named David Murithii aka DJ D-Lite as the new board chair.

Below is the full statement in full.

KECOBO RECEIVES RESULTS OF FORENSIC AUDIT ON THE OPERATIONS OF KENYA ASSOCIATION OF MUSIC PRODUCERS (KAMP), MUSIC COPYRIGHT SOCIETY OF KENYA (MCSK) AND PERFORMERS RIGHTS SOCIETY OF KENYA (PRISK) 

The Chairman of the Kenya Copyright Board (KECOBO) Mr Mutuma Mathiu and a team from the Board of Directors and management this morning received the final Draft report of the just concluded three-year forensic audit on the operations of Music Copyright Society of Kenya (MCSK), Performers Rights Society of Kenya (FRISK) and Kenya Association of Music Producers (KAMP).

The Board of Directors of KECOBO ordered the forensic Audit for the 2017 to 2019 this year with a view to establish a better system of royalty management going forward in addition ensure individuals who may have previously been involved in mismanagement of funds are made accountable as part of the reforms in the CMO sector.

The firm of Ronalds LLP conducted the Forensic Audit on behalf of the Kenya Copyright Board.

The Chairman noted that the preliminary findings of the Forensic Audit raised the following notable issues amongst them:

  • diversion of royalties;
  • Poor Corporate Governance and separation of roles;
  • non-existence of critical policy documents or breach of existent policies in human resource, finance, procurement, operations and ICT;
  • non-remission of statutory deduction and non-compliance with statutory requirements;
  • negligence in asset management, debt recovery and irregular payments;
  • suspected fraudulent transactions;
  • significant structural and administrative gaps in management;
  • Ghost or duplicate members; and
  • poor record keeping in general

The non-compliance exposes the three societies to serious risk of misappropriation of funds; civil and criminal liability and loss of income from penalties and sanctions.

“With the receipt of the Final Draft Forensic Audit report KECOBO has demanded for a formal response to the findings within (7) days from today,” KECOBO Executive Director Mr Edward Sigei said.

Mr. Sigei noted that the provisions of the Copyright Act and other laws guided the process of undertaking the forensic audit.

“The same shall guide the actions of the KECOBO Board of Directors with regard to the implementation of the Final Forensic Audit Report,” Mr Sigei promised.

“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,” Mr. Mutuma said.

“The Kenya Copyright Board is looking at several options in implementation of the results of the audit report including reference to 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,” Mr. Mutuma added.

For any clarifications, contact the undersigned.

Cyrus Kinyungu Head of Communications,

Kenya Copyright Board Tel 0722313191

[email protected]

September 2019: A consultative meeting between ICT CS Joe Mucheru and with the 3 CEOs and 3 Chairmen of Collective Management Organizations (Kamp, PRiSK and Mcsk) at his Telposta offices. Also present was Executive Director, Kenya Copyright Board.

Musicians Complain About MCSK’s Meagre Royalty

 


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