Vodafone recalls Safaricom finance chief from Nairobi
Mr Bob Collymore (right), Safaricom CEO with Mr John Tombleson the company’s finance director at a past press briefing. Courtesy | NATION
What you need to know:
The report by accounting firm KPMG names Mr Tombleson, alongside four other senior executives, as having unprocedurally influenced the purchase of a Sh1.15 billion five-acre piece of land at Nairobi’s Garden City where Safaricom plans to build its headquarters.
The forensic report, currently before the National Assembly’s Trade, Finance and Planning committee, details a review of 23 questionable tenders at Safaricom dating from September 2013 to August 2015.
The other top executives named in the forensic report are Roy Masamba (director of resources), David Kinuu (head of human resource - shared services), Vodafone’s group property strategy manager Richard Muraszko and former Vodafone executive Billy Davidson.
Telecoms operator Safaricom’s chief financial officer (CFO), John Tombleson, is set to exit the company after a five-year stint, the Business Daily has established.
Safaricom chief executive Bob Collymore declined to reveal the reason behind Mr Tombleson’s imminent departure but said it is not in any way linked to matters raised in a forensic audit report currently the subject of a parliamentary investigation.
“Our HR policies do not allow us to disclose the details of an employee’s contract. However, as a key Vodafone resource, John’s contract has a set limit and he will transition to his next position in line with the routine rotation schedules put in place for any employee seconded to Safaricom from Vodafone,” Mr Collymore said in response to queries on the matter.
The report by accounting firm KPMG names Mr Tombleson, alongside four other senior executives, as having unprocedurally influenced the purchase of a Sh1.15 billion five-acre piece of land at Nairobi’s Garden City where Safaricom plans to build its headquarters.
Mr Collymore, however, restated his earlier position that the report was incomplete and that it had not found any Safaricom employee to have inappropriately benefited from the commercial agreements.
“A close reading of the draft report shows that there is absolutely no evidence that any of the named individuals or organisations benefited inappropriately from any of Safaricom’s commercial agreements,” he said.
Mr Tombleson, 53, succeeded Christopher Tiffin, who served as CFO for three years beginning August 2008.
Les Baillie, another executive seconded from Vodafone, was Safaricom’s CFO for nearly a decade until Mr Tiffin took over from him in 2008.
British telecoms operator Vodafone owns a 40 per cent stake in Safaricom, and has historically appointed the chief executive and the CFO for the Kenyan telecoms firm.
Kenya's most profitable
Mr Tombleson, a New Zealander, is part of the team that has steered Safaricom to its current position as Kenya’s most profitable company.
In the period ended March 2012 — when Mr Tombleson announced his inaugural financial results — Safaricom posted a 4.03 per cent drop in net profit to Sh12.6 billion on the back of a high-stakes price war with rival Airtel.
Airtel’s calling rates tumbled to Sh3 per minute from Sh8 within the network, while off-net tariffs were cut to Sh3 a minute from Sh12 — forcing Safaricom to take a huge cut on margins.
CFOs traditionally face pressure to cut costs, grow revenue, and ensure control, according to research by Deloitte, which says the role now includes strategy formulation.
Safaricom’s revenue has nearly doubled during Mr Tombleson’s tenure to Sh195.6 billion as at March 2016 compared to Sh106.995 billion in 2012, translating to a compounded annual growth rate of 16.29 per cent.
Net earnings tripled in the period under review to Sh38.1 billion, despite Safaricom’s heavy capital expenditure on the rollout of base stations, fibre network, upgrade of the M-Pesa platform and information system.
Safaricom has been pumping at least a fifth of total revenue to capital expenditure, which touched the Sh32.13 billion mark in the year to March 2016.
The outgoing CFO leaves behind a telecoms operator awash with cash, having ended the March 2016 fiscal year with Sh8.50 billion and no debt.
Mr Tombleson joined Safaricom from Vodafone Qatar, where he held the roles of acting chief executive officer and CFO.
Unlike other board members, Mr Tombleson does not hold any Safaricom shares.
Mr Collymore has 908,000 shares in the company he leads, while long-serving board chairman Nicholas Ng’ang’a holds 855,100 shares, according to the latest financial report.
Former chief executive Michael Joseph owns 2.3 million Safaricom shares. Other directors with interests in the telecoms firm are investment secretary Esther Koimett (517,600 shares), Nancy W. Macharia (43,000 shares), and Treasury secretary Henry Rotich (2,200).
Though incomplete as Mr Collymore has stated, the naming of Mr Tombleson in the damning KPMG dossier remains the only blight in his stellar career in Kenya.
The forensic report, currently before the National Assembly’s Trade, Finance and Planning committee, details a review of 23 questionable tenders at Safaricom dating from September 2013 to August 2015.
KPMG auditors say Mr Tombleson had begun talks with private equity firm Actis about buying land at Garden City eight months before Safaricom’s board of directors considered a plan to build an office complex dubbed ‘One City’ project.
“We found correspondence between the finance director, John Tombleson, and Mentor Management CEO James Hoddell in which they were discussing the possibility of Safaricom acquiring land at the Garden City site several months before the formal process commenced,” says the KPMG report, referring to an email dated August 14, 2013.
Safaricom’s board of directors was first informed of the need to consolidate operations under one roof on May 12, 2014 and the firm finally bought the land in July 2015 from Actis.
The KPMG forensic auditors also poked holes into valuation of the land and integrity of bids, and questioned Actis’ cross-ownership in Ruaraka Diversified Investments Ltd, the entity behind Garden City, and Mentor Management, the firm Safaricom picked to search for a suitable property.
KPMG says that Mr Tombleson and the other senior managers knowingly exposed Safaricom to financial loss and failed to declare the conflict of interest between Actis (Ruaraka Diversified Investments Ltd) and Mentor Management.
The other top executives named in the forensic report are Roy Masamba (director of resources), David Kinuu (head of human resource - shared services), Vodafone’s group property strategy manager Richard Muraszko and former Vodafone executive Billy Davidson.
“Tombleson, Masamba, Davidson, Muraszko and Kinuu were aware of a conflict of interest between Mentor Management and Actis,” says the KPMG report.
“They failed to put in place sufficient measures to provide safeguards or procedures that would safeguard the interests of Safaricom. Further, they did not declare this conflict to the executive committee and the board.”
