By James Anyanzwa

Citibank NA, the lead-receiving bank during the Safaricom IPO, is once again under siege over its delayed completion of the reconciliation process with the Authorised Central Depository Agents (CDAs).

A special audit report by the Controller and Auditor General on Safaricom IPO has faulted the manner in which the bank handled the issue.

Because of the delay, the report reckons that it was not clear whether the Government got full value for its money in the sale of 10 billion shares in the mobile phone operator.

The audit on Safaricom IPO was carried out to establish if financial and procurement regulations were followed and whether the Government obtained value for money during the process.

Procurement procedure

However, the report by Mr A S M Gatumbu notes that only financial and procurement regulations and applicable laws were complied with during the IPO.

The report, which was tabled before Parliament on Tuesday, said Citi Bank had by December 2008 not yet completed reconciliations with other relevant stakeholders in the IPO.

Consequently, it was not possible to establish the amount of proceeds yet to be remitted to the Treasury, over and above the sum of Sh49.89 billion it received as at that date.

"No reasons were provided for the delay in the completion of the reconciliations," said the report dated July 2009.

The latest attack on Citibank comes amid huge discontent within the stockbroking and investment-banking fraternity over the manner in which the local subsidiary of a New York-based Citi group handled the IPO refunds.

Certainly, the liquidity constraints facing the stock market have partly been blamed on Safaricom IPO refunds.

Some brokerage firms, including the Safaricom IPO’s co-sponsoring brokers — Discount Securities Ltd and Ngenye Kariuki & Company Ltd — have since collapsed and placed under statutory management.

Great Indictment

The Kenya Association of Stockbrokers and Investment Banks argue that Citi bank’s involvement in the IPO was a great indictment of their contribution to the country’s economy.

"With due respect to the reputation of this esteemed banking institution (Citibank) we are of the view that their intransigence has emerged as the stumbling block to the resolution and release of huge sums of money that can only have come from investors and through market intermediaries," said Mrs Jane Njeru, the association’s Chief Executive.

But Citibank has maintained it has undertaken the process of reconciliation in a meticulous and conscientious manner and has maintained an open door policy for brokers to present all outstanding issues.

"It should be noted that all brokers have duly signed the reconciliation certificates attesting to the completeness of the reconciliation process between themselves and Citi. Ade Ayeyemi, the bank’s Managing Director for East Africa, was quoted by the local media last year.

Mr Ayeyemi said Citibank had also undertaken additional actions to assist in addressing queries and issues raised by brokers after the closure of the IPO, including numerous communication and requests of meetings with the brokers.