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Rotich, Poghisio grilled by EACC over planned Telkom merger

BUSINESS
By Cyrus Ombati and Roselyn Obala | September 4th 2019

Suspended Treasury Cabinet Secretary Henry Rotich and former Information minister Samuel Poghisio (pictured) were yesterday grilled over the planned merger of Telkom Kenya and Airtel Kenya.

The two were summoned to the Ethics and Anti-Corruption Commission (EACC) where they spent over eight hours responding to questions by detectives. They later recorded statements.

They are part of a team that has been summoned for questioning over the merger that the anti-graft agency wants temporarily stopped pending the conclusion of the probe.

EACC boss Twalib Mbarak said privatisation of Government agencies has something to do with the ministries.

“Treasury and the ministry concerned have a hand in privatisation and that is why they are here,” he said.

A number of other officials at the ministries, including former ones, are also scheduled to be questioned on the issue.

Mr Rotich was in charge of Treasury when the process was mooted while Poghisio was at Information and telecommunication.

EACC wants the plans to be 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 commission maintains that Telkom’s true worth is unknown and has never been made public.

According to 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 Chief Executive Mugo Kibati to give a detailed statement on the matter ahead of the planned merger.

EACC maintains that 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.

“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,” EACC added.

The 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.

A third company, Adili Trustees - which has never been mentioned before - has 0.014 per cent shareholding.

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