Shareholders raise fitness queries over AccessKenya chair
The immediate former chairman Michael Somen, who owns six per cent of AccessKenya and is the father of Jonathan Somen (pictured), the managing director of the internet firm, also held the position in breach of the CMA guidelines. File
AccessKenya shareholders have questioned the fitness of Daniel Ndonye as chairman of the internet services firm. Investors said that his position was in breach of corporate governance rules guiding the selection of heads of boards for listed companies.
The shareholders said that Mr Ndonye’s appointment as chairman failed the five-year rule, which states that board chairmen should be independent directors who have not consulted for a company for a period of five years prior to taking the leadership.
Mr Ndonye retired from Deloitte in May 2010 as the managing partner of the financial services firm that has been AccessKenya’s auditor for more than five years
This means that he stands to be regarded as an independent director of the internet company from 2015.
“The chairman served at Deloitte for more than three decades and we feel his past relationships with Access and Deloitte may compromise his independence and that of the audit firm,” said a shareholder who refused to divulge his name during the firm’s AGM held in Nairobi on Tuesday.
His sentiments sparked a series of questions from other shareholders even as Mr Ndonye maintained that his commitment to AccessKenya was unwavering.
“I didn’t apply, I was approached to serve in the board as a professional,” he said.
“I left the company completely and I do not have any relationship with Deloitte now. He replaced Michael Somen in June 2010 at a moment when the internet service company was coming off a vicious boardroom battles that have seen three directors resign in early 2010.
The directors included Ngugi Kiuna (chairman of BOC Kenya), Eddy Njoroge (managing director of KenGen) and businessman Mungai Ngaruiya.
Boardroom wars
The boardroom wars were linked to differences over the outcome of an audit into how the company procured material and expertise for the 150 kilometre inland cable it built two years ago.
The three shareholders complained that decision-making at AccessKenya had remained in the grip of the Somen family to the exclusion of independent directors, despite the firm going public in June 2007. The family, with two seats on the board and in 2010 three, has a combined stake of 29.6 per cent in the company.
AccessKenya has never had an independent chairman since it listed Nairobi Securities Exchange (NSE) through an IPO.
The immediate former chairman Michael Somen, who owns six per cent of AccessKenya and is the father of Jonathan Somen, the managing director of the internet firm, also held the position in breach of the CMA guidelines.
The guidelines discourage firms from appointing relatives of senior managers as heads of their boards because they are not defined as independent directors.
The CMA guidelines cannot be enforced since they are not enshrined in law, but the capital markets regulator is racing to turn them into regulation in what will prompt an overhaul in the composition of the boards of NSE-listed companies.
“Chairmanship of a public listed company should be held by an independent and non-executive director,” says the CMA’s guidelines on appointment of chairmen of listed companies in Kenya. “An independent director is a director who within the last five years has not had any business relationship for which the company has been required to make disclosure.”
The guidelines also discourage key suppliers or service providers or customers of a company or executives who had been employed by the company within the last five years from being appointed as chairmen.
Companies breach rules
A number of companies including KenolKobil and Rea Vipingo have breached these rules on the appointment of their chairmen—highlighting the influence of old-boy networks in the appointment of directors.
Kenol Kobil has the CEO Jacob Segman doubling up as chair of the board while Rea Vipingo’s board is headed by Oliver Fowler, who is partner at law firm Kaplan & Stratton—which is the sisal firm’s advocates.
“There is no conflict of interest as far as Deloitte is concerned, and the board has been reviewing its service to the company,” Michael Turner, a director of AccessKenya told the shareholders in response to Mr Ndonye’s link with the auditing firm.
AccessKenya moved back into profit last year with a net profit of Sh101.4 million compared to a loss of Sh7.9 million in 2010 and its share has shed 30 per cent over the past year to Sh5.50—which is lower than its IPO price of Sh10.
