Kenyans may have to wait much longer to buy shares in the profitable mobile telephone firm, Safaricom, after a parliamentary watchdog committee recommended the suspension of the firm’s public sale of shares estimated at Sh34 billion.
The Public Accounts Committee, which is chaired by Siakago MP Justin Muturi, said the issue of who owns 10 per cent of the Vodafone Kenya Ltd shareholding should be resolved before the sale.
Controversy over the shareholding of a company called Mobitelea, which reportedly owns the shares, has been raging for months, with the public and Parliament demanding to know names of those behind the company.
Shareholder
The ownership of Safaricom has in the recent past become a bone of contention with business analysts and the public wanting to know who is behind the third shareholder.
According to the report, by 2003, the Government owned 60 per cent of Safaricom, Vodafone Kenya Limited, 35 per cent and a third company, the remaining five per cent of the shares.
The document says the Safaricom CEO was unable to disclose to the committee who the direct and indirect shareholders of the company are.
According to the report, Safaricom was established in May, 2000, when Telkom (K) Ltd and Vodafone Plc paid $22 million and $33 million, respectively.
Government officials questioned by the committee on the issue were Finance permanent secretary Joseph Kinyua, Investment Secretary Ester Koimett and Information and Communication Ps, Dr Bitange Ndemo.
Others questioned were Safaricom CEO Michael Joseph, finance manager Les Baillie, the Director General Communication Commission of Kenya, Mr John Waweru, Telkom (K) Ltd CEO Sammy Kirui and Registrar of Companies Jane Joram.
The much-anticipated sale of the Sh34 billion worth of shares in Kenya’s most profitable company, which made a Sh17 billion profit last year, faces a major hurdle after the PIC recommended its suspension.
According to the committee’s report, the Initial Public Offer (IPO) should be suspended until a 10 per cent share, which it says was irregularly transferred to Vodafone Plc is immediately returned to Telkom Kenya.
Held in trust
It further suggests that the share in question, once transferred, should be held in trust for the public and be factored into the privatisation of the company.
The report comes at a time when preparations for the IPO are in top gear, with the Treasury already evaluating expression of interest from various applicants. The expression of interest has been invited for the provision of professional advisory services for the floatation.
This has attracted several high-profile international investment banks, including Goldman Sachs International, Citibank, NA Kenya, Renaissance Capital, Morgan Stanley & Co International PLC, Standard Bank Group Limited, Credit Suisse Europe Limited and DCDM Advisory Services Limited.
Despite the preparations at the Treasury, the PIC also recommends Kenya Anti-Corruption Commission director Aaron Ringera, immediately investigate the circumstances and manner in which 10 per cent of Telkom (K) Ltd shares in Safaricom Ltd were transferred to Mobitelea Ventures.
The MPs want action taken against those found to have been involved in the irregular transfer. The committee also recommends that the Communications Commission of Kenya CEO Waweru step aside “until the investigations are completed” for his roles on the board of the defunct Kenya Posts and Telecommunication Corporation and Telkom at the time of when transfer of the share in question took place.
The MPs want those officials who approved the transfer of Safaricom shares in 1999 barred from holding public office.
The Safaricom IPO is expected to be the first and the biggest in the mobile telephone service sector.
The PIC has also recommended that the Telkom Kenya CEO and the ministries of Information and Finance determine the value of the 10 per cent shares “irregularly ceded to Mobitelea Ventures”.
“The firm (Mobitelea) and or Vodafone Plc should be made to redeem the determined value by June 30, 2008,” the report says.
According to the PIC, Mobitelea Ventures is not based in nor does it operate in Kenya.
SOURCE: DAILY NATION
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