Bill Lay, CMC managing director. A Parliament report says his job at the motor dealer should not be done by a foreigner as there are many qualified Kenyans who can do it. Photo/File
What you need to know:
The report, which was prepared following parliament’s investigations into the recent boardroom wars at the motor firm, says Mr Lay, an American citizen, should not have been hired to do a job that many Kenyans are qualified to do.
Mr Lay was unable to table any evidence of his academic qualifications before the committee, the report says, adding that the controversial manner in which he got the authority to work in Kenya makes it difficult to ascertain whether he has a valid work permit.
Consequently, the Departmental Committee on Finance, Planning and Trade concluded that he got his work permit illegally and wants it cancelled immediately.
The Okemo committee’s report also delves deeply into the issues at the centre of the CMC boardroom wrangles with recommendations that if passed by Parliament could rekindle the flames of shareholder wars that have recently diminished after the capital markets regulator thrust its weight into the matter.
CMC chief executive Bill Lay’s fitness to lead the motor dealer has been challenged after a parliamentary committee tabled a report in the House indicating he was unable to show his qualifications for the job.
The report, which was prepared following parliament’s investigations into the recent boardroom wars at the motor firm, says Mr Lay, an American citizen, should not have been hired to do a job that many Kenyans are qualified to do.
Mr Lay was unable to table any evidence of his academic qualifications before the committee, the report says, adding that the controversial manner in which he got the authority to work in Kenya makes it difficult to ascertain whether he has a valid work permit.
“The committee was concerned that Mr Lay was hired without the requisite academic and professional qualifications or collaboration of his educational qualifications with his work experience over his 37 years of service,” reads part of the report.
Consequently, the Departmental Committee on Finance, Planning and Trade concluded that he got his work permit illegally and wants it cancelled immediately.
“Mr Lay’s work permit should be cancelled immediately, in the interest of the Kenyan public, unless there is a compelling reason not to do so,” the report says.
The committee chaired by Nambale MP Chris Okemo says Mr lay appeared to have misled the Ministry of Immigration and Registration of Persons about his educational and professional qualifications leading to a temporary rejection of his application for a work permit in December last year.
Immigration minister Otieno Kajwang had at the time ordered that Mr Lay’s work permit be revoked, a move that would have effectively ousted him from employment with the motor dealer.
Mr Kajwang’ issued the order in a letter dated December 20, 2011 to the Director of Immigration Services.
“I hereby direct that you revoke his permit forthwith until (CMC’s warring shareholders) sort out their internal management problems and until they advise us otherwise, “Mr Kajwang wrote in the letter to the director of immigration services.
The minister later rescinded his orders after CMC chairman Joel Kibe reacted angrily to the decision with a long letter to the minister accusing him of malice.
“We are advised by our lawyers that the directive you have issued is capricious, arbitrary, high-handed … and otherwise null and void in law,” Mr Kibe wrote.
Mr Kibe argued that the goings on at CMC were out of Mr Kajwang’s jurisdiction, adding that Mr Lay, who is married to a Kenyan, should have been given a hearing after living and working in the country for 17 years.
Mr Kajwang’, who admitted to issuing the May 30, 2011 directive that gave the CMC chief executive a work permit, said his earlier order was informed by the then vicious boardroom wars at the motor dealer.
CMC hired Mr Lay in May last year and a few months later he accused the then chairman Peter Muthoka of defrauding the motor firm of up to Sh1.5 billion through his logistics company Andy Forwarders.
The fallout deepened after Mr Lay terminated Andy’s contract with CMC and Mr Muthoka was subsequently removed as chairman of the board on September 8, 2012.
Mr Muthoka, Joseph Kivai - also a director at Andy- and Mr Richard Kemoli were ultimately ousted from CMC’s board earlier this year.
The Okemo committee’s report also delves deeply into the issues at the centre of the CMC boardroom wrangles with recommendations that if passed by Parliament could rekindle the flames of shareholder wars that have recently diminished after the capital markets regulator thrust its weight into the matter.
While acknowledging the Capital Markets Authority’s (CMA) wide-ranging powers to intervene in the affairs of a public company to safeguard the interests of the minority shareholders, the report says suspension of CMC’s shares from trading at the Nairobi Securities Exchange (NSE) has taken too long and is consequently eroding the value of the company.
On the day of suspension, the company’s share price closed at Sh13.5, with CMA saying it acted to protect shareholders from panic sales that would have eroded their value.
CMC, which for the first time slipped into losses in the year ended September last year with a net loss of Sh181.1 million, has moved back to the profit zone.
The dealer’s net profit stood at Sh383.5 million in the six months to March compared to Sh120.1 million a year earlier as sales increased to Sh6.3 billion from Sh6.1 billion.
Despite its sales of vehicles declining to 1,163 units from 1, 202 units, it booked Sh450 million in foreign exchange gain from a loss of Sh106 million.
The committee further dismisses the controversial forensic report that consultancy firm PriceWaterhouseCoopers (PWC) produced on CMC’s operations after it was hired by the motor dealer’s management to do the job.
“The committee observed that the forensic report by PwC contained many disclaimers and hardly provided any conclusive findings. The committee also noted that the Weber Wentzel report had expressed reservations on the reliance which can be replaced on the PwC report due to its many disclaimers and numerous calls for further investigations.”
CMA, the capital markets regulator has also come under heavy criticism over the manner in which it made decisions regarding the CMC saga.
The committee advises the regulator against relying on the forensic audit report by PWC saying it was commissioned by the motor dealer’s management that had an interest in its findings.
CMA appointed Webber Wentzel, a South African audit firm, to carry out a forensic audit on CMC, but excluded Andy Forwarders’ contract from the terms of reference forcing the committee to question the decision.
The report also criticises CMA for failing to take any actions on Weber Wentzel’s recommendations on the contract that CMC signed with marketing firm Pewin Motors.
“CMA appears not to have taken any action in connection with the Pewin contract which attracted an adverse mention in the Webber Wentzel report. For the sake of fairness and even handedness amongst the players in the CMC dispute, the committee considers and recommends that appropriate investigations be commenced on the allegations made in respect of that contract,” the report reads.
It remains to be seen what impact the criticism will have on CMA’s recent actions against key personalities in the boardroom war that is also the subject of numerous court battles.
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