Cytonn retains high rating for Safaricom despite tender claims
Cytonn managing partner Edwin Dande. The firm has maintained a high corporate governance rating for Safaricom despite allegations of multibillion-shilling tender irregularities at the listed telco. PHOTO | FILE
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Analysts at the investment company said they will not review Safaricom’s ranking as Kenya’s second best governed listed firm with a score of 83.3 per cent, which was based on pillars such as integrity, disclosures and transparency.
Safaricom trailed KCB Bank, which emerged top with 95.8 per cent in the corporate governance index. Cytonn said it used a total of 24 metrics, including internal control procedures and accountability, to develop the ranking.
Cytonn managing partner Edwin Dande said the decision is informed by Safaricom’s commitment to sanction all those mentioned in the forensic report by KPMG which lays bare massive procurement irregularities.
Cytonn Investments has maintained a high corporate governance rating for Safaricom despite allegations of multibillion-shilling tender irregularities at the listed telco.
Analysts at the investment company said they will not review Safaricom’s ranking as Kenya’s second best governed listed firm with a score of 83.3 per cent, which was based on pillars such as integrity, disclosures and transparency.
Cytonn managing partner Edwin Dande said the decision is informed by Safaricom’s commitment to sanction all those mentioned in the forensic report by KPMG which lays bare massive procurement irregularities.
“The CEO’s commitment to act ‘uncompromisingly’ on the findings of the report affirm our ranking of Safaricom as one of the best governed companies,” said Mr Dande in an interview with the Business Daily.
“A high ranking does not mean that a company is without fault or issues, it means that is has the culture, governance and systems in place to confront issues when they arise and that shareholders can trusts that the systems will work and that their interests are protected.”
Safaricom trailed KCB Bank, which emerged top with 95.8 per cent in the corporate governance index. Cytonn said it used a total of 24 metrics, including internal control procedures and accountability, to develop the ranking.
National Assembly’s Finance, Planning and Trade committee was to meet Thursday to draw up a calendar to summon top Safaricom executives, suppliers and contractors named in the KPMG report which tracks 23 questionable deals at the giant telco.
Safaricom shares Thursday stood at an improved Sh17.30 apiece after shedding Sh0.20 on Tuesday.
Safaricom chief financial officer John Tombleson along four other senior executives are alleged to have irregularly purchased a Sh1.15 billion five-acre land from Actis-owned Garden City where the telco plans to build it headquarters.
The KPMG auditors have also raised queries relating to payments worth Sh1.2 billion to seven firms to carry out marketing activations to promote Safaricom’s brand and products.
Other tenders probed by KPMG is the procurement of corporate promotional merchandise totalling Sh201 million from Vajas Manufacturers Ltd, Huawei’s $12.5 million contract to upgrade the M-Pesa platform, and payments amounting to Sh2.1 billion to Scanad, the creative arm of WPP Scangroup.
The list of doubtful deals at Safaricom include contracting South Korean firm Kaon Media to supply set-top boxes at $1.6 million, My 1963 commuter card project with Fibre Space Ltd (Sh15 million), purchase of network spares management from GSM Systems ($2 million) and a billing system from Huawei costing Sh839 million, according to the KPMG report.
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