Storm at Portland AGM over election of new director

French conglomerate Lafarge Tuesday renewed its fight with the Kenya government for control of Portland cement board at a chaotic annual shareholder meeting characterised by alleged breach of corporate governance rules.

The ensuing confusion ultimately saw the government fail to have former chief executive of motor dealer CMC Bill Lay elected to the Portland Cement board.

The government, which has a 25 per cent stake in Portland and the National Social Security Fund (NSSF) with a 27 per cent stake immediately opposed Lafarge’s attempt to have Didier Tresarrieu replace its outgoing representative in the board Hamish Keith.

Lafarge has a 41.7 per cent interest in Portland.

Mr Lay was rejected in an election by acclamation called that Portland board chairman Mark Ole Karbolo thrust upon the shareholders on grounds that the government had not issued a notice of intention to have the new director election on the basis of shareholding. 

The combined Treasury and NSSF stake of 52.3 per cent gives the government an upper hand in any vote cast on the basis of ownership.

Differences between the two main shareholders, the government and Lafarge, also failed to push for the expansion of the East Africa Portland Cement Company (EAPCC) board to 11 directors from the current seven for the state to reclaim majority voting rights.

Journalists were denied access to the AGM and Businesses Daily put together this story from multiple sources who attended the shareholder meeting.

The move by the state is the clearest signal that the government has not given up on its fight to overhauling the cement firm’s board including having a new CEO, whose term expired on November 16 but is yet to be renewed.

The government was said to have preferred voting on the basis of shareholder strength, but EAPCC Chairman Mark ole Karbolo said that this could not happen give that the state had not offered a prior notice, paving way for the use of show of hands.

The state accuses Mr Karbolo of refusing to accept the use of voting ahead of the AGM, setting the stage for vicious fight for the control of Portland cement’s board and executive suite.

In a letter dated Tuesday, Industrialisation principal secretary Wilson Songa, also a director at Portland, informed the Capital Markets Authority (CMA) that Mr Karbolo rejected calls for a poll.

The common practice in corporate Kenya is that directors are normally elected by a simple show of hands at AGMs.

If majority shareholders are keen to have their appointees elected, they need to declare in advance that the elections will be based on voting, analysts say.

“Common practice and the first option is use of show of hands where a simple majority carries the day. If disputed, a poll may be conducted where the weight of each vote is based on shareholding,” says Conrad Nyukuri, partner at Axis Kenya, a company secretary consultancy firm.

Last year, the government unsuccessfully attempted to oust eight EAPCC directors including the chief executive Kephar Tande, accusing them of poor governance.

The directors, including Karbolo, Kenya Airways CEO Titus Naikuni and lawyer Hamish Keith, moved to court to block the move following the State’s directive to disband the cement maker’s board.

The court reinstated them in a legal battle that also saw former President Kibaki’s appointment of Mr Karbolo’s replacement revoked.

Mr Keith, the managing partner at Daly & Figgis Advocates, was being replaced by Lafarge with Tresarrieu, who previously served as Bamburi Cement CEO.

The state wanted the position of the retiring Mr Keith taken by Mr Lay, who now works at KK Security after quitting auto firm CMC in May.

Difference between in board begun to emerge in September when Mr Karbolo informed the Industrialisation Cabinet Secretary Adan Mohamed to offer Mt Tande another term
Senior officials in the ministry have been pushing for a review of the board’s August 8 decision that offered Mr Tande a new three-year term.