The Capital Markets Tribunal has declined an application by the industry regulator to consolidate two cases in which senior officials of Kakuzi have been accused of approving payment of millions of shillings from the agricultural firm to companies they formed without disclosing their interests.
The tribunal chaired by Paul Lilan said in a ruling that despite the fact that the cases arise from a series of the same transactions, the process followed by the Capital Markets Authority (CMA) could be different, leading to the different appeals.
The regulator had summoned the managing director Christopher Flowers separately before issuing a notice to show cause letter to eight other directors of Kakuzi.
“In our view, the consolidation of the two appeals would have a negative effect of muddling up issues for determination in both appeals. As stated above, the issue of procedure goes to the core of both appeals,” said the tribunal.
The tribunal also disagreed that the success of one of the appeals would directly translate to success in the other case, as argued by the CMA.
At the same time, the tribunal declined to allow two minority shareholders of the company, Steven Kimani and Daniel Kimotho, to participate in the appeal, saying they did not demonstrate an identifiable legal interest in the proceedings.
The two applicants had also not demonstrated any prejudice that they would suffer in case they were not allowed to join the proceedings, said the five-member tribunal.
“Admittedly, if indeed the applicants are shareholders of the company 10th Appellant [Kakuzi] (we do not find any evidence adduced to that effect) they would have some interest in the matter. The outcome of the appeal in these circumstances, however, would not curtail any of their rights,” the tribunal said.
The officials summoned are Nicholas Ng’ang’a, Graham Harold Mclean, Andrew Ndegwa Njoroge, Ketan R. Shah, Daniel Ndonye, Stephen Waruhiu, John Kimani and Benjamin Okiring.
The CMA claims that some officials of Kakuzi entered into a contract with another company for the provision of technical services for finance and administration without disclosing to the board that they were the only shareholders and directors of the company.
The regulator also alleged that Kakuzi entered into a management support services agreement that had no end date.
An inquiry by CMA reportedly established that three Kakuzi officials are the directors and shareholders of the company that rendered the management support services.
“Between January 1, 2018, and March 10, 2021, Kakuzi made irregular and/or unsupported payments totalling Sh320.9 million for the management services support which the three officials of Kakuzi who are also shareholders of that management support services company allegedly approved and/or authorised,” states the regulator.
The CMA wanted the cases heard together saying both appeals were subject to an inquiry into the corporate governance of the company.
