Government and Policy

Senate Investigation On EABL Ignorant, Critics Say

BY Soko Directory Team · September 10, 2023 12:09 pm

KEY POINTS

Diageo's acquisition of additional shares in EABL was approved by the CMA in January, about two months after the company announced its intention to buy an extra 14.97 percent stake. The stake represented up to 118.4 million shares at an offer price of KSh192 per share. EABL has been a public company since 1933 and was the first company listed on the NSE when it was created in 1954.

KEY TAKEAWAYS

A poll conducted by InfoTrack and released in July 2023 showed that at least 72 percent of Kenyans felt the country was headed in the wrong direction. 12 percent felt the country was neither headed in the right nor wrong direction and only 15 percent were in support of President William Ruto's administration.

The decision by the Senate to open an inquiry into the affairs of a private company has raised concerns about Parliament’s capacity to do its job and the potential to scare away investors.

This follows the highly publicized meeting on Thursday by the Senate’s Committee on Trade, Industrialisation, and Tourism with the top management of East African Breweries Plc to investigate what it said was the fraudulent acquisition of the company’s shares.

The committee’s ‘investigation’ has been triggered by a petition by Rono Nicholas, a Public Information Officer at Bomet County who is also understood to be a Senate employee, sponsored by Bomet Senator Hillary Kirui.

The gist of the allegations by Rono, backed by Senator Hillary Sigei Kiprotich, is that the recent acquisition of an additional shareholding in EABL by Diageo was fraudulent. Diageo, a British drinks company, recently upped its stake in EABL to 65 percent from 51 percent, with the purchase of shares from other shareholders approved by the Capital Markets Authority and the Nairobi Securities Exchange.

The Senate’s decision to go ahead with the purported investigation of the goings-on in a Public Limited Company was on Friday criticized as a waste of time with the potential to paint the House in a bad light.

Senior Counsel Ahmednasir Abdullahi said in a post on X (formerly known as Twitter) that Parliament’s Speakers Moses Wetang’ula and Amason Kingi need to review the “intrusive powers” of the House Committees.

“Surely, summoning EABL whose shares are openly traded in the Nairobi bourse to explain why X bought Z shares is not just a waste of time but paints the Houses of Parliament in a bad light,” said Ahmednasir.

Writing on the same platform, Cytonn CEO Edwin Dande described the widely broadcast story on Citizen TV as “painful to watch”.

“Senators asking a private company, EABL, why it’s selling its assets and/or its shares? Surely, it’s none of our business as EABL is private property protected by the constitutional right to property,” said Dande.

While Ahmednasir said the Speakers would need to vet the processes and procedures for conducting the House’s oversight powers, there are already well-established steps before a petition can be brought to the floor of the House and referred to a committee for an inquiry to happen.

Every petition is first scrutinized by the Clerk of the House that receives it to determine whether it has merit and whether the House has the power to delve into it.

It would therefore have been fairly easy for Senate Clerk Jeremiah Nyegenye and his officers to scrutinise the petition by Rono Nicholas and establish that it was asking the House to investigate issues that are not under its domain.

But the Clerk appears to have bent to the will of Senator Kirui, who had sponsored the petition by his constituent Rono. Rono Nicholas identifies himself on LinkedIn as a Public Information Officer in Bomet County but it is understood that he is an employee of the Senate, meaning that the Senate is entertaining an inquiry from its employee on a matter that’s outside its domain.

Among the most vocal at the meeting with EABL Group CEO on Thursday was Uasin Gishu Senator Jackson Mandago, with Senators Okiya Omatata and Karungo wa Thang’wa also asking questions.

Read More:

Diageo’s acquisition of additional shares in EABL was approved by the CMA in January, about two months after the company announced its intention to buy an extra 14.97 percent stake. The stake represented up to 118.4 million shares at an offer price of KSh192 per share. EABL has been a public company since 1933 and was the first company listed on the NSE when it was created in 1954. As a listed company, the shares of EABL are publicly traded, and anyone can buy them. No law bars foreigners from buying shares in listed companies. Foreign investors have dominated major players at the NSE for years.

The Senate’s inquiries have the potential to scare away investors as they suggest the country’s elected representatives and the bureaucracy that supports it are either ignorant of the law on private companies or are prepared to disregard them. It also suggests they are ignorant of the fact that a country’s economic roots and foundations are built and anchored on investors and it is through investments and businesses of giant multinationals, and small and medium enterprises, among others that a country’s heartbeat is sustained.

President William Ruto suggested the defiant, aggressive approach is desired when he used a threat lifted from the Bible, as he fired a warning shot at Jaswant Rai, the head of the family behind Kabras Sugar, who has been in a fight with others to take over Mumias Sugar Company.

The Head of State gave the investor three options, the famous “Mambo ni matatu” slogan; to either go into exile, be thrown to jail, or “go to heaven”, meaning death. Coincidentally, Jaswant was later abducted and later released, apparently too shaken to speak of his ordeal, and has gone on to withdraw his lawsuit against the sugar company.

The statement from the visibly angry President was probably the first ever to have come from a Kenyan President directed to a private citizen who has billions worth of investments across the country.

That statement has the potential to motivate other leaders to harass and lecture other investors in total disregard of the law.

There are reasons to be worried.

Among the reasons given by those who were polled to justify that the country was headed into a deep ditch with no hope of recovery were the high cost of living, unemployment, and poor governance.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory