The Nairobi Securities Exchange name board at their Nairobi offices. EAPCC shares did not trade at NSE for the second day yesterday. DIANA NGILA
The East African Portland Cement Company saga took a new twist Wednesday after it emerged that the alleged transfer of shares that purportedly wrested control of the firm from the government had not taken place.
The capital markets regulator said contrary to an announcement made by NSSF managing trustee, Alex Kazongo mid this month, there had been no transfer of shares by the retirement fund to its staff pension scheme.
“The Capital Markets Authority (CMA) would like to confirm that no portion of the National Social Security Fund (NSSF) shareholding in East African Portland Cement Company has been transferred or sold. The NSSF shareholding in the company remains at 27 percent,” said the regulator in a statement.
Permanent secretary in the ministry of industrialisation, Karanja Kibicho, was the first to raise doubts over authenticity of the alleged transfer, when he told the Business Daily on Tuesday that he had not seen any documents detailing the deal. “Nobody has shown us documentation on NSSF’s share transfer despite our request for evidence,” said Mr Kibicho in an interview.
The transfer of shares to NSSF’s staff pension scheme, a private entity, would have reduced the retirement body’s stake in EAPCC to 23 per cent from 27 per cent.
This would have effectively diluted the government’s majority stake in the firm, and changed EAPCC’s status as a state corporation. Treasury directly owns 25.3 per cent shares of EAPCC, and the government controlled stake would have dropped to 48.3 from 52.3 per cent. The government has historically leveraged on NSSF’s stake to retain control of management of EAPCC as a state firm.
If the alleged transfer of 3.6 million NSSF shares worth Sh200 million turn out to be false, then EAPCC will retain its status as a parastatal.
The industrialisation ministry, which represents the government on the board, had relied on its majority control of the firm to suspend EAPCC’s board of directors and chief executive, Kephar Tande, last week. EAPCC’s board and Mr Tande on the other hand had dismissed industrialisation minister Amason Kingi’s directive, stating that the transfer of shares by NSSF had made the cement maker a private entity that made the minister’s order invalid. The board and acting managing director, Peter Korir, have since used newspaper adverts as a battleground to fire salvos at each other.
An advert published yesterday by EAPCC chairman Mark ole Karbolo and Mr Tande asked the public to ignore the ministerial directive and Peter Korir who was appointed as the acting chief executive. “The company and its legitimate Board of Directors shall therefore not be held responsible or liable for any activities being undertaken by the said Peter Korir and his handlers,” read the advert.
EAPCC shares remained halted from trading at the Nairobi Securities Exchange (NSE) for the second day yesterday. The shares have been temporarily stopped from trading since Tuesday, the first day of trading after the saga began before the Christmas break.
Boardroom battles
George Bodo, a research analyst at ApexAfrica Capital said that EAPCC share was still temporarily halted yesterday, which was an expected decision from the NSE given the circumstances. “You do not want to invest in a company where one board member is saying one thing and another is saying another,” said Mr Bodo.
Karugor Gatamah, a governance expert, said that the issue will only be resolved by the NSE and CMA and a fresh election of shareholders will be the best remedy to restore investor confidence. Other shareholders are French cement conglomerate, Lafarge with a 41.7 per cent stake and the public that holds the remaining six per cent.
EAPCC becomes the second listed company to have boardroom battles that have seen shares stopped from trading at the NSE.
CMC’s shares have been suspended from trading since is September following boardroom wars and reports of financial impropriety, which is under investigation.
