Portland takes CMA to court in Treasury, Lafarge board row

East African Portland Cement Company (EAPCC) has gone to court, seeking to lift the suspension of its annual general meeting resolutions by the Capital Markets Authority (CMA).

The company argues that the CMA lacks the mandate to suspend the resolutions since AGMs are overseen by the Registrar of Companies.

“The CMA be restrained from interfering in any way whatsoever with regard to the implementation of the resolutions passed at the 81st AGM, pending hearing and determination of this application,” reads one of the orders sought by EAPCC company secretary John Maonga.

CMA suspended the resolutions by shareholders two weeks ago following a protest from the government, which is the majority shareholder.

The government argued that its clout did not count after EAPCC chairman Mark ole Karbolo adopted a show of hands, instead of number of shares held, to approve the day’s business.

“He (Karbolo) was clearly in a hurry to carry out the assignment of forcing through the items on the agenda in total disregard of the government’s entitlement to a poll as a majority shareholder,” said Industrialisation principal secretary Wilson Songa, who represents the government on the board.

Among the sticking points was the appointment of Didier Tresarrieu to represent Lafarge, the third largest principal shareholder, against the wishes of the government which wanted former CMC chief executive officer Bill Lay in the board.

EAPCC has listed CMA, the attorney- general, National Social Security Fund (NSSF) and its trustee, and Nairobi Securities Exchange (NSE) as respondents.

In the papers filed in court, the government accuses French conglomerate Larfarge of compromising some of the State appointees in a bid to control the board through the backdoor.

The Treasury and NSSF jointly own 52 per cent while Lafarge owns 42 per cent, leaving six per cent in the hands of minority shareholders. Mr Maonga said the suspension and ongoing investigation by CMA could lead to its suspension from NSE and paralyse its operations.

On Monday, High Court Judge George Odunga ordered that the status quo be maintained and directed the parties to respond by January 15 when the case will be heard.

CMA launched investigations into claims of creative accounting and breach of corporate governance rules during the EAPCC’s AGM on December 17 following protests from the Treasury and the NSSF.

READ: CMA moves to probe Portland after chaotic AGM

The government also sought nullification of Mr Tresarrieu’s election as a director and repeat of the poll.

In response to the suit, Dr Songa accuses Larfarge of seeking to control the cement firm to benefit Bamburi Cement, EAPCC’s rival. Dr Songa is also the Treasury’s representative in the firm’s board.

Dr Songa says Larfarge has blocked the government’s efforts to address mismanagement by winning to its side two State appointees, Mr Karbolo and managing director Kepha Tande.

EAPCC says CMA did not accord it an opportunity to explain what transpired at the AGM before suspending the resolutions. Mr Maonga says he received from NSSF the intended special resolution to amend articles of association and increase the number of shareholders from seven to nine on November 26.

Mr Maonga says he advised NSSF that it was not possible to present it to the AGM because the agenda had already been circulated and the amendment required special notice.
He said he received the notice of nominations of Mr Tresarrieu on December 9 and that of Mr William Lay a day later.

Mr Maonga claims he rejected the notice to nominate Mr Lay since it was presented outside the required seven days prior to the AGM as per the EAPCC articles of association.

The dispute erupted at the AGM when a proposal by Dr Songa and Mr Gideon Kyengo, a representative of NSSF, to nominate Mr Lay as a director was rejected.

Dr Songa says he met Mr Kyengo, Mr Tande and Mr Karbolo to impress the latter two to elect Mr Lay, but they rebelled.

“The chairman (Mr Karbolo) and managing director (Mr Tande) indicated that they would not support government’s position despite being government appointees,” Dr Songa says.

An attempt to block tabling of the audited financial statement was overruled by Mr Maonga on the grounds that an NSSF representative chaired the board audit committee that reviewed and adopted the statement.

Dr Songa says that despite the firm being a public listed company, shareholders were thoroughly vetted and the media locked out.

He claims that the only item that was put to vote was the payment of dividends and financial statements because the meeting later turned rowdy.