Parliament house team suspects foul play in Telkom Kenya sale

The Capital Market Authority has vowed to take stern action against listed firms that flout corporate governance guidelines. [PHOTO: FILE/STANDARD]

By WINSLEY MASESE

Parliament has questioned the manner in which the Government lost a 19 per cent stake in Telkom Kenya, saying it could have led to the loss of billions of shillings of taxpayers’ money.

During a sitting with the Auditor-General and the Privatisation Commission, Parliamentary Investment Committee (PIC) members read mischief in the way the transfer was done, pointing to a possible scandal.

Credible sources

“According to our credible sources, the transfer was done on December 31, 2012 and June 30, 2013, and these were critical moments in the country,” PIC Chair Adan Keynan said.

Between these dates, the government had its shareholding diluted to 30 per cent from 49 per cent.

“The transactions took place in the election mood and when the Budget was being closed,” Keynan said.

Privatisation Commission Chief Executive Officer Solomon Kitungu raised the ire of the members when he said he was not aware of any transaction between the government and France Telecom.

“If there was any transfer of actual shares from the government to France Telecom, then it is news to me and it was against the law,” he said.

“Four years after the commission was formed, why were you not involved in the transfer of shares,” the members asked.

Part of the privatisation agency’s mandate is to oversee the transfer of government commercial activities and operations to the private sector in a transparent, predictable and equitable manner, in collaboration with key players. Its absence in the transaction raises questions on the credibility of the whole exercise.

Treasury’s stake in Telkom Kenya stood at 49 per cent in November last year, but dropped to 40 per cent in December following a Sh34 billion balance sheet restructuring plan.

This further dropped to 30 per cent in June this year, after Treasury failed to make a capital injection of the remaining part of Sh4.9 billion it was required to put in the operator’s Sh10 billion cash call.

According to PIC, the first transfer took place on December 31, 2012, raising questions on whether the relevant government officials were present to witness the transaction. The second transfer took place on June 30, a day to deadline for submitting the government report.

Bigger influence

The change in shareholding means that France Telecom will have bigger influence in the management of the cash-strapped Telco that owns prime land, buildings and telecommunication equipment around the country.

Reduced voting rights and smaller board representation will make it difficult for the government to push its agenda in the firm, including its quest for job cuts, review of the management team and change of strategy.