A Canadian federal agency set up during former Prime Minister Justin Trudeau’s time in office has lost a massive Ksh6.9 billion after investing in a struggling Kenyan company, according to Canadian media reports.
The agency, called FinDev Canada (officially the Development Finance Institute), was created in 2017 to support private-sector growth in developing countries. But now, documents show its first-ever investment in Kenya went very wrong.
The shocking revelation came out on Wednesday, August 13, when FinDev finally made public an internal memo it had hidden for more than five years. The memo admitted that the team did not do full “due diligence” before committing millions.
“Due to lack of time, the team must rely on due diligence performed by others,” said the minutes from a November 10, 2017, board meeting.
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In another staff email, an employee warned:
“Because (our) first transaction will be the object of significant scrutiny, we will need to ensure the rationale for our involvement is articulated clearly and convincingly.”
Despite these warnings, FinDev’s board went ahead and approved the investment. Their first deal was buying $10 million (Ksh1.2 billion) worth of shares in a door-to-door sales company that sells cellphones and housewares.
Records show that the approval came only weeks after the company’s CEO personally contacted FinDev, raising questions about how much research was really done.
Between 2018 and today, FinDev bought even more shares in the same Kenyan company worth $43.4 million (Ksh5.6 billion).
But the business was losing money. Reports say the company’s total losses reached about $138.6 million (Ksh17.9 billion) in that time. Yet, FinDev admitted it could not figure out exactly how these losses would affect Canadian taxpayers.
When asked for a statement, the agency said:
“FinDev takes seriously its responsibility for transparency regarding its financing and investment activities. At the same time, FinDev is mindful of the need to protect certain commercially sensitive or personal and otherwise restricted information.”
The Kenyan company is still running today and has even expanded into four other African countries. Founded in 2010, it has attracted millions from big-name global investors.
However, it has not escaped trouble. In Kenya, the firm has faced serious legal and regulatory challenges, including being ordered to pay millions in unpaid taxes after losing an appeal at a tax tribunal.
For now, critics are questioning how a Canadian taxpayer-funded agency, meant to support responsible development, could lose billions in a deal where its own staff admitted from the start that they didn’t fully check the facts.
