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Portland Cement-State feud drags on as Capital Markets plays it safe

BUSINESS
By By Moses Michira and Macharia Kamau | December 19th 2013
Entrance to the East Africa Portland Cement factory. The Government’s attempt to replace Kephar Tande with Bill Lay has failed.

By Moses Michira and Macharia Kamau

Kephar Tande could just be another company boss but he owes his job at East African Portland Cement to the most unlikely of circumstances – a legal technicality.

However, this could as well prove to be a temporary victory as the Government digs in for a fight over what Industrialisation PS Dr Wilson Songa on Tuesday termed as a ‘sham’.

The government attempt to replace Tande with Bill Lay on Tuesday failed due to what Mark ole Karbolo, the board chairman described as a procedural issue ‘because the notice of intent was filed a day too late’.

“The government’s move to appoint Lay as a director was time-barred because the notice of intent should have been filed at least seven days before the AGM,” Karbalo said, adding that an individual shareholder – a Mr George Miriti – had proposed Lay’s name for consideration during the AGM on December 11- which fell within the last seven days preceding Tuesday’s meeting.

But in a letter to Chief Executive Officer of capital Markets Authority Paul Muthaura, Songa discounted Karbalo’s statements — saying Lay’s nomination to the board was communicated on December 9 but was excluded from the agenda out of the chairman’s ‘sheer impunity.’

This is the second time Tande is surviving the government guillotine in two years ago. In the first incident, former President Mwai Kibaki sacked Tande and the rest of the board membersearly last year. The decision was, however, overturned by a court, which ruled that EAPC was not a parastatal and that the State was interfering with a private firm.

What made yesterday specifically critical is that the Government had in their corner the backing of NSSF — bringing their collective stake in the cement producer to 52.3 per cent.

Mr Songa says there was no way therefore any resolution would have been passed without their backing.

“…the chairman of the meeting Karbalo unilaterally rejected the call for the poll and proceeded with each agenda item without stating whether the resolutions were passed or not,” Songa said in a letter to CMA.

He dismissed the resolutions of the AGM including the purported extension of Tande’s second three-year term as managing director. His contract lapsed November 16 this year.

Songa asked the CMA to nullify the resolutions made and investigate the conduct of some directors during the AGM. The ministry also wants CMA to demand that directors call a fresh general meeting.

“We request that you require the company not to carry into effect any resolutions purportedly passed in the AGM… and direct he company to re-convene the AGM and an independent person be nominated by yourselves to oversee the conduct of the meeting,” said Dr Songa.

It could be a while, however, before CMA makes its ruling on the matter as Muthaura yesterday said they needed time to consult.

Show of defiance

“We need to consult with all the stakeholders before any action is taken. It is an important issue and we are looking into it,” said Muthaura.

In the meantime, EAPCC has filed a copy of the resolutions passed at the AGM with the CMA and the Nairobi Securities Exchange (NSE) — signalling the board’s plans to defy Government.

The Tuesday drama is the latest in a game of boardroom machinations between Government and management over control of the resource-rich cement maker.

It is believed that the 13,000 acres of land the firm sits on could be behind the supremacy wars pitting NSSF and the State on one side against French cement maker Lafarge on the other. Lafarge owns 41.7 per cent stake in EAPC and another 58.4 per cent in the country’s largest cement maker, Bamburi.

As presently constituted, Lafarge is indirectly in control.

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