Companies

Telkom Kenya fights EACC in court over assets sale freeze

Summary

  • Telkom Kenya is seeking court orders to stop the anti-graft agency from interfering with any of its properties ahead of the firm’s merger with Airtel.
  • In a suit filed at the High Court, the telco has sued the Ethics and Anti-Corruption Commission (EACC) on claims that the agency is demanding a list of its properties.
  • Telkom Kenya reckons that it is a private entity with no public assets, which fall within the category of properties that the EACC is mandated to investigate in line with Chapter six of the Constitution.

Telkom Kenya is seeking court orders to stop the anti-graft agency from interfering with any of its properties ahead of the firm’s merger with Airtel.

In a suit filed at the High Court, the telco has sued the Ethics and Anti-Corruption Commission (EACC) on claims that the agency is demanding a list of its properties.

Telkom Kenya reckons that it is a private entity with no public assets, which fall within the category of properties that the EACC is mandated to investigate in line with Chapter six of the Constitution.

The anti-graft agency wants Telkom Kenya to recall any recent sale of its properties and suspend further sales pending the inquiry, which has been ongoing for more than five years.

The EACC wants to investigate whether there was the misappropriation of public funds and properties during Telkom Kenya's privatisation and when the firm restructured its balance sheet.

Telkom was privatised in 2007 when French telecoms operator Orange bought a majority stake, which was subsequently sold to Helios in 2015.

Through lawyer George Oraro, Telkom says the February 26 directive by the EACC to freeze any sale of assets is "draconian and unreasonable".

Telkom now wants the EACC barred from restricting, limiting or otherwise interfering with its property as well as accessing a list of its properties and recalling or suspending any of them pending the conclusion of ongoing investigations

It argues that allowing the EACC wishes to stand will adversely affect its ability to fund recurrent expenses and operate its businesses, putting it at risk of running into irreparable losses.

"The said directive contravenes Telkom's right to property, fair administrative action, access to justice and fair trial," said Mr Oraro.

The telco claims it had received clearance from Parliament's Public Investment Committee through an April 2014 report, which did not recommend any scrutiny with regards to misappropriation of assets before and after its privatisation.

It adds that the EACC wrote to them on October 7, 2015, requesting various documents without indicating the nature of their investigations.

The agency had earlier suspended a planned merger of Telkom Kenya and Airtel Kenya pending an inquiry into the use of funds and properties at Telkom.

But Telkom has already received regulatory approval to merge with Airtel Kenya, even though the two entities are protesting the merger conditions.

The matter is now before Competition Tribunal, with part of the merger terms being contested including the order to freeze sell any assets of the resultant entity within the first five years.

At the time the deal was announced, Airtel said the deal would not involve Telkom Kenya's extensive real estate holdings and some government contracts for unspecified services.