Maverick investment adviser who refuses to toe CMA’s line calls it a day

While many businesses would go to any length to stop publication of news of an impending shutdown by the regulator, Andrew Franklin, the chief executive of Franklin Management Consultants (FMC), has been keen to share his story with the media.

The American national has been managing an investment advisory business in Nairobi for nearly a decade but says he may finally leave Kenya unless things dramatically change in his favour.

Mr Franklin has distinguished himself as a maverick investment adviser who boldly takes on the dreaded Capital Markets Authority (CMA), commenting on all manner of governance and regulation issues that few licensees of the regulator would dare touch.

He accuses the CMA of being out to shut him up due to his outspoken nature, and intends to forestall such action by voluntarily closing down his business in 2014.

He has invited the regulator for a final audit on his firm, which handles an investment portfolio of about Sh344 million ($4 million), ahead of the planned shut-down.

Mr Franklin wrote to the CMA to say he would not seek renewal of his licence and that he was ready to close the business by February 2014 after making arrangements to protect his clients.

His major gripe has been that the CMA refused to allow his request to be exempted from several regulatory requirements such as the appointment of a chairman and independent directors to oversee management of the company.

He has also differed with the regulator on the need for recapitalisation, arguing that his firm was too small to require the extra cash and bureaucracy.

The CMA has stood its ground in enforcing the rules which it says are necessary for safeguarding investors’ welfare.

Extended licence

For the better part of 2013, FMC has been operating on an “extended” licence, until the CMA asked him to explain why it should not be revoked.

He sees this as harassment by the CMA, which he says is unhappy with his criticism, such as when he took on the regulator for not acknowledging in its annual reports significant macro-economic developments such as the post-election violence of early 2008.

Yet that is not the only complaint that Mr Franklin has made against the Kenyan and American authorities.

He says he lost his title to a home he owns in Lavington by virtue of the provisions of the new Constitution, and it has to wait until it is regularised by the new Land Commission, as is the case for many other foreigners.

“It is the only home I own, but I cannot officially prove I own it,” said Mr Franklin, estimating the house to be worth Sh138 million ($1.6 million).

The former US marine came to Africa more than 30 years ago, and decided to set up a business in Kenya. His office based in Westlands is full of books, covering a range of subjects from military and business to politics.

But he says he is disappointed with the “lethargy” exhibited by many regulatory authorities. Even the American Embassy in Nairobi and the entire US government are not exactly his favourites.

He believes they have been in conspiracy with the CMA to make his life as a businessman as difficult as possible.

READ: CMA to close financial advisory firm

More than once he has asked the American government not to fund the CMA, but communications between him and the US officials in Nairobi, as seen by Business Daily, indicate nothing concrete appeared to emerge from them.

The CMA sent a team of three people to the FMC offices for the audit ahead of the company’s closure date, though nothing has been made official yet.

“Inspection conducted by team of three for five and a half hours; despite (acting CMA CEO Paul) Muthaura’s assertion of urgency, nothing further? I guess the CMA will place notices in the media … along with submissions to the Kenya Gazette to appear some time in the New Year,” wrote Mr Franklin in an e-mail message.

Nothing can pacify him. He also traces his problems to accusations he made — about which he has written several times to the CMA — that some stockbrokers were involved with (Armenians) Atur brothers, who were deported after brandishing guns at the Jommo Kenyatta International Airport.

“The senior executives at CMA are not satisfied that I have decided to abandon commercial activities dating back to March 1991 but are also trying to show how much red tape and professional malpractice can be launched in my direction,” he said in a recent e-mail message in relation to the audit of his company.

Mr Franklin confesses that he has not been as good a businessman as he would have wanted although he considers himself a good salesman. He marketed insurance policies for years in the past before he ventured into investment advisory.