Published on March 26, 2008, 12:00 am
By Abiya Ochola
ODM has for a second time opposed the sale of Safaricom shares to the public, saying the Government had contravened the Privatisation Act.
Party Secretary-General, Prof Anyang’ Nyong’o, on Tuesday demanded that the identity of Mobitelea, which owns five per cent shares in Safaricom, be established before the IPO begins on Friday.
“The privatisation of Safaricom must be in conformity with the provisions of the Privatisation Act. The Government has sidestepped the crucial requirement, leading to several omissions in the process of the grand sale,” he said.
Nyong’o demanded that the IPO be transferred from the docket of the Investment Secretary at the Treasury to the Privatisation Commission as the law requires.
The Act requires parliamentary approval of privatisation and sets up a commission that sets standards to protect public interest.
Nyong’o said Finance minister, Mr Amos Kimunya, failed to prepare and submit a Privatisation Strategy to Parliament for debate as required under the Privatisation Act.
“If this had been brought to the floor of the House, Kenyans would have known the faces behind the mysterious Mobitelea. This poses the danger that the ghost owners will now be unjustly enriched. The Parliamentary Investment Committee has the powers to demand the identity of Mobitelea owners,” he said.
Addressing a press conference at Orange House, Nyong’o said the timing of the IPO was not right owing to the “structural and regulatory inefficiencies of the bourse”.
“Concrete measures must first be taken to address the inefficiencies. Several brokers have gone under with people’s investments, given the recent problems at the Nairobi Stock Exchange,” he said.
The Government is in the process of offloading 25 per cent of its shares at the NSE through an IPO against the backdrop of a crisis where two leading brokers are under statutory management. Nyaga and Francis Thuo stockbrokers are in liquidation having sunk with billions of shillings in investments.
Conflict of interest
Nyong’o accused Kimunya of condoning a conflict of interest to benefit a clique.
“Take the example of Dyer and Blair Investment, which has been appointed the advisor to the IPO. The company’s owner (Mr Jimnah Mbaru) is also the chairman of the NSE. Such conflict of interest in this matter is unacceptable,” Nyong’o said.
He questioned how the value of Safaricom shares was established and wondered how a profitable company could sell at Sh5, while the Kenya Airways IPO went for Sh6 more than a decade ago.
“There is no transparency and I can see some element of manipulation where the IPO is cheap only to shoot to astronomical levels within one week of trading,” he said.
The MP said the sale should be beneficial to the public and consider equity. The party took issue with a requirement that the shares could only be bought through banks and brokerage houses, which he said were inaccessible to most Kenyans.
Last year, ODM went to court to stop the proposed IPO in public interest, to protect the legislative authority of Parliament and to ensure transparency.
It lost in the High Court and the Court of Appeal, but the Government postponed the IPO.
Nyong’o said the proposed sale should be delayed until a new Cabinet was in place. He was, however, quick to dismiss allegations that the party stand on the IPO was related to a suspected stalemate in Cabinet appointments between President Kibaki and ODM leader, Mr Raila Odinga.
The Government owns 60 per cent of Safaricom, while Vodafone Plc of UK owns the remainder, five per cent of which it allegedly sold to Mobitelea.