Court allows Lay to replace Karbolo as cement firm chair

President Uhuru Kenyatta’s decision to sack East Africa Portland Cement Company (EAPCC) chairman Mark ole Karbolo was upheld by the High Court Thursday.

Justice Mumbi Ngugi ruled that an earlier order stopping the Capital Markets Authority and the government from interfering with shareholder resolutions made during a controversial annual general meeting on December 17 last year did not shield Mr Karbolo.

“I dismiss Mr Karbolo’s application,” she ruled and directed Mr Karbolo to bear the legal cost incurred by the government while defending the sacking. The ruling paves way for former CMC chief executive Bill Lay to become the cement firm’s chairman.

The earlier orders were given after CMA suspended the AGM resolutions which were contested by the government — the majority shareholder — on grounds that voting was by a show of hands instead of by the strength of shareholding.

On February 7, President Kenyatta removed Mr Karbolo from chairing the firm’s board and replaced him with Mr Lay. Mr Karbolo went to court three days later and obtained orders stopping Mr Lay from occupying the office, arguing that Mr Kenyatta’s action was a breach of court orders.

Industrialisation Principal Secretary Wilson Songa had earlier that morning introduced Mr Lay as the new chairman at firm’s Athi River factory.

On Thursday, Justice Ngugi said that Mr Karbolo was seeking to exploit the controversy surrounding the shareholders’ resolutions to remain in office until end of his term in October.

“Mr Karbolo was trying to protect his own personal interest. Even if the court allows all orders sought by the petitioner, the orders have no impact on Mr Lay and Mr Karbolo,” said Justice Ngugi.

READ: Court stops Uhuru’s bid to oust Portland board chairman

The judge said Mr Karbolo should bear the cost of this suit since he was not acting in the interest of the cement firm.

Mr Karbolo had said that Mr Lay was defeated in the government’s quest to have him become a director of Portland Cement in the December AGM by Didier Tresarrieu, whose appointment has been frozen.

EAPC in December moved to court to challenge the suspension of resolutions saying that CMA lacked the mandate because AGMs were overseen by the Registrar of Companies.

Among sticking points was the appointment of Mr Tresarrieu to represent Lafarge, the third largest principal shareholder, against the wishes of the government which wanted Mr Lay on the board.

Separate ruling

Justice Ngugi will next month deliver a separate ruling regarding the suspension of shareholders’ resolutions by CMA. Mr Karbolo’s lawyer, Samuel Aduda, told the High Court that he would appeal the decision.

Government lawyer Kamau Karori persuaded the court that Mr Karbolo should seek redress before the Industrial Court which handles disputes between employers and employees.

During the introduction of Mr Lay, Dr Songa said the decision to cut short Mr Karbolo’s term was informed by Portland’s poor financial performance.

Mr Karbolo was first appointed to replace Benson Ndeta as chairman of the board in November 2008 for a three-year term which was renewed in 2011.

In 2012 President Mwai Kibaki failed to remove Mr Karbolo, managing director Kephar Tande and Lafarge directors Titus Naikuni and lawyer Hamish Keith.

The High Court revoked the sacking and reinstated the four in a legal battle that saw Attorney-General Githu Muigai state that neither the government nor the State-controlled NSSF had controlling rights needed for EAPCC to be regarded as a parastatal.