Why Access Kenya’s AGM was suspended

A vicious boardroom battle over the pricing of AccessKenya’s metro fibre optic network caused the postponement of the firm’s annual general meeting, the Business Daily has established.

The meeting, which was initially fixed for May 4, was moved to August 31 in what the company attributed to a logistical hiccup.

It has now emerged that fear of an audit report showing lapses in the procurement of the inland cable leaking to shareholders and an extension of the board room fights to the AGM floor was behind postponement of the shareholders’ meet.

Documents seen by the Business Daily indicate that AccessKenya’s board split over the manner in which the company planned and procured suppliers for the inland optic fibre network, prompting them to order for a special audit by Deloitte.

Differences over the outcome of that audit and how the company should deal with it has since led to the resignation of three directors.

Eddy Njoroge, the managing director of KenGen was the first to leave the board on March 26 citing ‘ethical reasons’.

Ngungi Kiuna (a director at TransCentury) was forced out on April 19 while Mungai Ngaruiya resigned on May 3.

Documents seen by Business Daily show that the resignations were linked to a “lack of transparency in financial matters and weak management practices” relating to the handling of fibre optic deal.

The 150 kilometre inland cable is estimated to have cost the firm Sh450 million, having been revised downwards from the initial quotation of Sh624 million.

People familiar with the matter said things came to a head when Mr Ngaruiya demanded the resignation of four directors and forwarded the two audits reports to Capital Market Authority (CMA) in March.

That move forced the regulator to fire a stern letter to AccessKenya demanding an explanation on the matter within seven days.

The list of four directors on the spot included Michael Somen, the chairman, Jonathan Somen (managing director), David Somen (executive director) and Michael Turner, a private equity manager.

Details of the audits and the boardroom spats have been kept from the public, and fears that they might pop up at the firm’s shareholder meet forced the management to postpone the AGM.

“There were fears that Mr Ngaruiya would spoil the AGM. He was the only disgruntled director standing after Eddy and Kiuna resigned,” said an insider.