Pattni sparks a storm with the sale of Marshalls shares

The total outstanding loan amount could not be immediately established due to the long period it had been pending.

Delphis Bank was renamed Oriental Bank in 2002, four years before Mr Pattni claimed ownership of Marshalls Investment Limited after buying out Mr Somaia. This implies that Mr Pattni inherited the debt from his business rival who was a major shareholder in Delphis Bank.

The bank was one of the lenders to Goldenberg International, the company associated with Kenya’s biggest financial scandal of the early 1990s.

Goldenberg, owned by Mr Pattni, is the company that fraudulently obtained billions of shillings from the Treasury in false gold exports compensation.
A commission of inquiry into the Goldenberg scandal found that Delphis defrauded the Central Bank of Kenya of billions of shillings in fake export compensation claims. CBK is still battling it out with Oriental Bank in court.

Last year, Marshalls received a Sh401 million debt waiver in favour of a loan that Mr Somaia took from KCB.

Directors and executives friendly to Mr Pattni successfully argued in court that the loan was irregularly obtained when Marshalls did not have a board to approve the transaction.

By the end of March 2010, Marshalls East Africa’s debt at KCB had grown to Sh808 million.

The waiver helped to brighten Marshalls’ poor performance for that year – the company having provided Sh469 million as an expense on its books pending the outcome of the court case.

Last year, Mr Pattni sold a 15 per cent stake in Marshalls East Africa that earned him more than Sh30 million.

He then issued a notice of intention to sell additional seven million shares or 48.6 per cent stake in the company in March this year.

Latest regulatory filings to the Capital Markets Authority (CMA) show that Mr Pattni’s investment vehicle, Marshalls Investments Limited, has disappeared from the list of top shareholders while six existing owners increased their stake by 22.7 per cent.

Three new investors — Global Ltd, Azmaveth Investment and Kobos Ltd — entered the car dealer’s top shareholders’ list with a combined stake of 28.4 per cent.

Sources close to the share transaction said it was concluded between April and May and came as a surprise because analysts had expected that Mr Pattni would sell his stake to one of the global car dealers angling for an entry into the Kenyan market.

Woodside Ltd, Abner Holdings, Ahoh Investment, Kenaz Holdings, Aijalon Investments, and Ramoth Holdings are the existing shareholders whose stakes rose by between 1.8 per cent and 8.1 per cent.

Mr Pattni and Mr Somaia went to court in 2006 after Mr Pattni claimed that Mr Samoia had refused to hand over control of Marshalls to him even after he acquired a controlling stake in the firm.