The anti-graft agency wants the planned merger of Telkom Kenya and Airtel Kenya suspended after it emerged that the Government’s shares in Telkom are likely to reduce from 40 per cent to slightly below 15 per cent.
The Ethics and Anti-Corruption Commission (EACC) maintains that Telkom’s true worth is unknown and has never been made public.
According to the EACC, a 2014 valuation of Telkom estimated the firm’s value at Sh50.98 billion. The figure was based on a probe carried out by a parliamentary committee.
The anti-graft agency says it has asked Telkom Kenya CEO Mugo Kibati to give a detailed statement on the matter ahead of the planned merger.
EACC says the investigation into the planned merger between the two telecommunications companies is to ensure that Kenyans get value for money. The proposal to form a single joint venture company to be named Airtel-Telkom was announced on February 8 this year.
“In the past, Government privatisation deals have been shrouded in mystery leading to loss of taxpayers’ money. We want to safeguard public interest and ensure the merger is above board,” stated EACC chief executive Twalib Mbarak.
“The expected dilution of the Government’s stake in Telkom is a big concern. We want to know why the government shares will reduce by over 25 per cent after the joint venture.”
However, Mr Kibati said yesterday that the company has not received any communication from the authorities directing them to stop the merger deal.
In an exclusive interview with The Standard, the chief executive said the merger was still on course, with the transaction expected to be completed by the end of the year.
“To the best of my knowledge, we have not received any communication regarding investigations on our ongoing transaction with Airtel Kenya. The case in question dates back to 2014, which happened even before the current shareholders had assumed ownership and it has no bearing on the current discussions.”
Kibati, however, said the transaction was subject to regulatory approvals and expressed confidence the two operators have “checked all the boxes”.
The EACC probe also seeks to unearth the identity of shareholders of the company planning to take over Telkom.
Telkom is majority owned (60 per cent) by the UK-based private equity firm Helios Investment Partners, while the Government has a 40 per cent stake. The agency reckons there is a third shareholder whose identity must be made public.
According to documents obtained from the Registrar of Companies, the Treasury owns 39.99 per cent of the shares, Jamhuri Holdings, a foreign company, has a 59.99 per cent stake, while a third company, Adili Trustees , which has never been mentioned before, has 0.014 per cent shareholding.
Helios Investment Partners is using Jamhuri Holdings as a special investment vehicle.
The documents indicate that although Adili Trustees was registered in Kenya on September 2, 2009, with Eldama Ravine Gardens in Westlands listed as the registered address, the firm’s main trading address is listed in Mauritius.
The shareholders of the company are listed as Harveen Kumar Moolraj Gadhoke Mancharial (foreigner), Karim Saifuddin Karimbhai Anjarwalla (Kenyan), Amyn Abdul Aziz Kassamali Mussa (Kenyan), Atiq Saifuddin Anjarwalla (Kenyan), Mona Kishow Bhagwanji Pattani (Kenyan), Sonal Sejpal (foreigner) and Akash Rasik Velji Devani (Kenyan).
Telkom Kenya accounted for 7.9 per cent of mobile telecom subscribers as of March this year, while second-placed Airtel holds a 26.1 per cent subscriber share.
The National Assembly Implementation Committee, which is chaired by Narok North MP Moitalel Ole Kenta, adopted the special report on Telkom and has lined up specific persons for questioning. The MPs said there was a lack of clarity about the market valuation of Telkom and said they would seek to establish its true worth.
The investigation follows a recommendation by the Public Investment Committee (PIC) that officials in the Treasury and ICT ministries involved in the privatisation of the company be probed.
EACC says it received the PIC report on May 20, 2015, after which it initiated an inquiry.
Last week, Mr Mbarak told MPs there were questions about ownership of the company and said the commission needed at least six months to complete its work. The parliamentary committee gave him 30 days to finalise the inquiry.
Telkom Kenya was registered on April 3, 1997, as a private limited company.
Documents list the directors of the company as Mugo Kibati (CEO), Nitin Kaul, ICT PS Jerome Ochieng’, Jinaro Kibet (advocate), Dorcas Florence Kombo, Dennis Aluanga, Edward Njoroge and embattled National Treasury CS Henry Rotich.
Documents from the Corporate and Business Registration Department in Mauritius indicate that Jamhuri Holdings was incorporated on October 27, 2015.
The registered office address of the company is listed as Alexander House 35 Cybercity Ebene, Mauritius, but the documents do not name its directors or shareholders.
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