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Monday, August 13, 2007

May the Real Owners of Safaricom Stand Up?

Real Owners:

The past few weeks, the local media has been awash with details that the Public Investments Committee (PIC) wants the government t0 institute proceedings to establish the real owners of Safaricom one of Kenya's most profitable telecommunication company that raked in 17B pretax profit for the last financial year. Information available at Safaricom's web show that its sharehodlers are Telkom Kenya and Vodafone Plc.

5% Stake:
This parliamentary watchdog wants the much anticipated Safaricom Initial Public Offer (IPO) slated for latter this year shelved due to the failure by recent investigations to unmask the owners of a shadowy company with a 5% stake in Kenya's most profitable firm.
This therefore means that the planned sale of 25% of Safaricom shares to the public through the Nairobi Stock Exchange that was anticipated to raise close to 34B may be put on hold until the owners of Mobitelea ventures are known.

Mobitelea Ventures:
This is a shadowy company that is alleged to own 5% of Safaricom though the company CEO was quick to scoff at the report claiming that the reals owners of the company are Vodafone Plc with 40% and government through Telkom Kenya with 60% shareholding. The report says that in 1999, Telkom Kenya owned 70% of Safaricom Ltd while Vodafone Kenya Ltd owned 30%.
Mobitelea Ventures Ltd is a firm registered in Guernsey Island and whose directors are obscure through other nominees. The firm owned 10% in 2002, which was reduced to 5% in 2003 when Vodafone Plc "bought" back part of the shareholding.

However, the evidence available from the office of the Registrar of Companies indicates that Safaricom's authorised share capital is 1,000 with;

-Vodafone Plc having 40%
-Telkom (K) Limited 60%
-Messrs Paul B. Julan, John K. Mosonik, Augustine K. Cheserem, Ashwini Bhandari, Kenneth Hamish Keith, each had one(1) non-participating share.

Shoromo Ltd:
Last year, it emerged that in February 1998, when Vodafone Plc entered the Kenya, the UK firm had used a pseudonym Shoromo Ltd and only changed its name to Vodafone Kenya Limited on October 15, 1998. More...

For the clearly illustrated shareholding structure check out pesa tu blog.
Many think the claims that the shareholding structure of Safaricom cannot be clearly identified is a scheme to defraud the public. Although as a requirement, companies intending to issue shares through an IPO through the Nairobi Stock Exchange (NSE) should reveal all the fundamental information, including shareholding, that would influence any investors purchase of the shares, this remains to be seen. Kenya Re didnot reveal the details of the forensic audit report claiming that it was sub judice to the court proceedings on the same only making them available for inspection at the company premises which many may not bother.

IPO still on:
The Government has said the sale of Safaricom shares to the public will go on, as scheduled, despite recommendations to shelve it by a parliamentary committee last week.


bankelele said...

I�m not a company FC, but I don�t understand why companies register new entities in some different names. E.g. Kenya Airways annual accounts have financing arrangements through entities like simba finance, swara aircraft financing, kifaru aircraft financing, chui aircraft financing. seems that's how Mobitelea snuck in

Kip said...

A company is a legal entity and with a company being put as a director of another company it is a legal entity, a corporate person with legal duties and obligations.
If one needs to find out who the Directors of Safaricom are it might need a court order to break this corporate veil and reveal the true identities of Directors and their correpsonding shareholding.
This is often used to hide the nature and identity of persons who might be in big political places, influential posts to avoid conflict of interests and raising eyebrows.

J K said...

Kip, I am just wondering how a court would go around unmasking identities of directors who have used a legal process to mask themselves. In any case my position has been that we are the wrong fellows to scream about Vodafone dishing away it's shares for whatever reasons. Why are their share holders, majority of them being Britons, not concerned. We agreed on 60% Telkom and 40% Vodafone. Telkom got 60% and still holds them; so what is the big deal.

Anonymous said...

The big deal is they will or can influence who sits in the board of directors. Infact that is where the conflict of interests arises

Kip said...

@ JK Companies are establishments of the legal process, the courts are the proponents of the judicial precedents that become statutes and laws for all the successive courts to follow. If there is reasonable need to warrant the breaking of the corporate veil and reveal the true identities of directors so be it and the court has enough powers to do so.
The reason we are concerned is because the contract for the establishment of Safaricom was Between 2 parties who had the contractual capacity and obligation to enter into the contract without involving any other party. By Vodafone involving Mobitelea in its shareholding, without proper information to Telkom and Safaricom, which i bealieve is the case, they are in breach of the contract to have 60% and 40% shareholding without any hidden shareholders.
Before the IPO if there is reason to believe that the prospectus does not explain every finer detail including third party, hidden, indirect or direct interests in the company then any investor may have cause to go to court and stop the process.
@ Anonymous The Board of Directors is where substatial and major decisions are hatched and passed. If the BOD is skewed on one shareholder then vital decisions that ought to be passed will not pass but will be shot down.