Kenya’s Copyright Board To Probe Alleged Misuse Of Sh56 Million Artist Royalties

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The chairperson of the Kenya Copyright Board (KECOBO), Joshua Kutunny has called for a comprehensive investigation into the alleged misappropriation of Sh56 million designated for artists’ royalties.

This sum was purportedly mishandled by Collective Management Organizations (CMOs), sparking widespread concern and prompting immediate action from KECOBO.

The controversy centres around three licensed CMOs, the Music Copyright Society of Kenya (MCSK), the Kenya Association of Music Producers (KAMP), and the Performers Rights Society of Kenya (PRISK).

These organisations are responsible for collecting and distributing royalties to artists and reported a combined collection of approximately Sh249.7 million from January to December 2023.

However, discrepancies in the accounting and distribution of these funds have raised serious questions about their management practices. KECOBO’s scrutiny of the financial reports presented by these CMOs revealed significant inconsistencies.

For instance, while KAMP and PRISK accounted for their shares of the collection, MCSK reported a noticeable shortfall of Sh26 million.

Further examination showed that royalties were disbursed only for the first quarter of 2023, leaving the earnings from the subsequent quarters undistributed despite an ostensibly improved business climate.

According to the Copyright (CMO) Regulations, at least 70 per cent of the collected amount, translating to around Sh173 million, should have been distributed as royalties.

The failure to meet this threshold underscores a glaring non-compliance with statutory obligations. The CMOs cited various challenges, including a lack of police enforcement, substantial legal fees, and arrears in taxes to the Kenya Revenue Authority (KRA), as factors hindering their ability to make adequate royalty payments.

In response to these alarming findings, KECOBO has demanded additional documentation from the CMOs, including detailed income reports, legal fee breakdowns, and evidence of allocations for final royalties in 2023.

Preliminary analysis by KECOBO management highlighted unsustainable collection expenses, with only a meagre 10.5 per cent of collections being allocated as royalties. This situation falls significantly short of the standards set by copyright law.

The most concerning revelation was MCSK’s inability to account for Sh56 million, comprising unreported joint collections and funds received from other CMOs and international sources.

This alarming discrepancy has prompted Kutunny to direct the case to the Ethics and Anti-Corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) for thorough investigation.