Audit queries mystery offshore accounts as CMC prepares exit
News
By
Jackson Okoth
| Feb 01, 2014
|
Dubai-based Al Futtaim Auto and Machinery company has offered Sh13 per share to take over CMC Holdings. |
By Jackson Okoth
It is still unknown what amounts of CMC Holdings Limited cash is held in offshore accounts, ostensibly stashed away by former directors.
This situation remains so only months before conclusion of a takeover bid between CMC and Al Futtaim Auto and Machinery company — a Dubai-based conglomerate. The cash offer closes on February 14th, 2014, after which CMC will be delisted, making it difficult to disclose any more information concerning these hidden offshore accounts.
The company acknowledges that it does not have details on certain offshore bank accounts and has therefore not included this item on financial statements for year ended September 30th, 2013.
“Investigations into source of these funds held in these accounts, balance in the accounts, ownership and whether any amounts can be repatriated back to the company, are still ongoing,” said Joel Kibe-CMC Holdings Group Chairman in a statement released yesterday.
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Paper trail
Secrets surrounding these hidden offshore accounts could remain buried for decades to come. This is because the paper trail on transactions involving operation of offshore accounts has gone cold or disappeared altogether.
Take the example of a cover letter written on February 8th, 2000 from one S.W Lewis, operating the company’s offshore account in Cyprus, to the then director at CMC Jeremiah Kiereini.
The letter requests Kiereini to ensure that directors of CMC sign three loan agreements, which are up for renewal. The sums involved include a £500,000 loan to Kenya, which appears to have been secured through a private company, CMC.
Both Kiereini and Forster have since left CMC while Lewis, who operated the firm’s offshore accounts in Cyprus, has reportedly passed on.
While the motor dealer has been a major supplier of Government vehicles, the entry of China and other suppliers has tipped the scales against it. Accusations have been rife that some of former CMC directors were involved in fraudulent activities, including fund diversion to offshore accounts.
In the financial year ended 30th September 2013, CMC recorded a decline in gross profits to Sh2.4 billion, up from Sh2.5 billion recorded in 2012.
Its pre-tax profit also fell from Sh232.3 million in 2012 to Sh199.8 million during the same period.
CMC has had to pay Sh25 million to LandRover Jaguar staff who had to be made redundant when the firm lost this franchise.
CMC Motors Group Limited has since lost exclusive distribution rights of Jaguar and Land Rover, leaving it with Ford, Mazda, Volkswagen, Suzuki, Maruti, Nissan Diesel and MAN range of trucks (medium and heavy commercial) and buses.
It also distributes Iveco, Bobcat, New Holland and Case tractors and an extensive range of farming implements — from ploughs through to irrigation equipment.
In accordance with Take-over Regulations, the Capital markets Authority has extended the suspension of trading of CMC shares at the Nairobi Securities Exchange until when the offer lapses.
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