US watchdog suspends firm's shares over false Kenya deal

National Treasury Headquarters in Nairobi (PHOTO: FILE)

A Canadian company that claimed to have entered into a contract with the Government of Kenya to build Sh139 billion hospitals has been suspended from trading.

The US capital markets regulator, Securities and Exchange Commission (SEC), made the decision on Tuesday, noting that Kallo Inc made filings claiming to have entered into agreements relating to healthcare infrastructure projects in several African countries.

“The commission has serious concerns, for example, about the accuracy of the company’s claim that it has entered into a contract with the Republic of Kenya to establish a comprehensive healthcare structure,” said SEC in a notice  signed by its Secretary Vanessa Countryman.

Yesterday, the National Treasury Cabinet Secretary Ukur Yatani reiterated his earlier statement that Kenya had not entered into such a loan and called on a local publication that broke the story to withdraw the article and apologise.

The decision by SEC, said Mr Yatani, follows a complaint that his ministry lodged with the US watchdog following the story.

“On March 22, 2021, the National Treasury and Planning lodged an official complaint with the SEC over the unsigned, false and malicious loan contract filed by Kallo, Inc purporting to have entered into with the Government of Kenya,” he said.

Trading of the company’s shares, which also has Belarusian links, were suspended from the stock market from March 24 to April 7 pending investigation.

It was not immediately clear why the company might have made the false claims. One reason would be to hoodwink the market and shore up their share price.

Yatani said on March 18 that the newspaper article erroneously attributed the story to the SEC by claiming that the regulator had disclosed the deal between the Treasury and Kallo over the multi-billion-shilling deal.

Legally, said Yatani, filings have to be reviewed every three years and as such those of Kallo, which had been done on March 2, were yet to be reviewed.

In its filing, the company said it signed the deal with Kenya last year to build hospitals across the country in the face of the coronavirus pandemic.

The loan would be paid in three installments.

However, SEC, while suspending the company, noted that “there is a lack of accurate information of questions regarding the accuracy of statements the company has made in filings with the commission.

This included a Form 10-K for the year ending December 31, 2020, filed on March 3, 2021.