KenolKobil boss quits amid probe into insider trade

KenolKobil managing director David Ohana has resigned in the wake of an insider trading probe by the Capital Markets Authority (CMA) ahead of a takeover of the oil marketer by French firm Rubis Energie.

His successor was introduced to KenolKobil staff on Monday and a formal handover is expected to follow, sources at the company said.

Mr Ohana gave a “no comment” response when contacted by the Business Daily. “If it is on record, I have no comment,” said Mr Ohana.

KenolKobil chairman James Mathenge was also mum on the issue.

The CEO’s shock exit at a time some of the company’s shares are still under CMA probe mirrors that of his predecessor, Jacob Segman, who left in 2013.

Mr Segman was last year fined Sh5 million by CMA for failing to fully disclose his ownership in the firm when Kenol merged with Kobil.

Mr Ohana was last month excused by the CMA from legal proceedings over the alleged insider trading that saw shares worth Sh6.1 billion traded prior to the announcement of Rubis takeover deal last October.

Also linked to the insider trading were stockbroking agent Aly-Khan Satchu and a former long-serving chief executive of stockbrokerage firm Kestrel Capital East Africa, Andre DeSimone, who resigned early this month under a cloud of ongoing investigations, ending his 24-year career at Kestrel.

Suspicious dealings

The CMA had in October flagged as suspicious dealings in KenolKobil shares through 14 accounts. Mr Ohana was initially investigated for his role in the suspected insider trade dealings, but the CMA dropped the charges saying that findings had failed to “establish evidence of potential misconduct” on his part.

“The third respondent (Mr Ohana) has voluntarily co-operated with the applicant in terms of the orders issued on January 14, 2019, and has confirmed that he takes no issue with the manner in which the orders were sought, granted and executed against him by the applicant (CMA),” read the consent filed in court.

A party is guilty of insider trading if they leak material, price-sensitive and non-public information or use the same to buy or sell securities for personal gain.

First time individual offenders in the crime of insider trading are liable to a fine not exceeding Sh2.5 million or imprisonment for a term of two years and payment of the amount of the gain made or loss avoided.

If a company is a first time offender it can be fined up to Sh5 million besides full payment of the amount of the gain made or loss avoided.

Last month, Rubis announced that shareholders with a 96.85 percent stake had agreed to offload their shares, making it possible to increase its stake to 97.6 percent and compulsorily buy out the remaining stake. It was seeking to acquire 1.182 billion ordinary shares.

New CEO

The French multinational will now have to get a new CEO to complete the process that will see it delist it from Nairobi Securities Exchange (NSE).

“Rubis shall in due course initiate a process to obtain the requisite shareholder and regulatory approvals required to delist KenolKobil‘s share from NSE,” the firm said last month.

This will leave Total Kenya as the only publicly traded oil marketer in the Kenyan market.

Mr Ohana is expected to earn Sh2 billion from the sale of all his 88 million shares to the French firm.

The CMA had last year challenged the oil marketer’s move to issue Mr Ohana with 88 million shares, saying the employee share ownership plan allowed him to take up a maximum of 37.25 million shares.

However, KenolKobil amended its employee stock ownership plan (ESOP) rules to allow Mr Ohana to take up all the shares. The decision was also approved by the CMA.

The CMA has so far granted Rubis all approvals to complete the transfer of shares, a process the latter said it has commenced. This will see shareholders pocket Sh26.35 billion, having accepted the offer price of Sh23 per share.

It applied to the CMA to extend suspension of trading of KenolKobil’s shares until the squeeze out of the remaining shareholders is completed.

Rubis initially bought 367.7 million shares or a 23.72 percent stake in KenolKobil in the open market on October 23, 2018 and thereafter made an offer to buy the rest of the shares.