Bad Politics to Blame for our Woes

Since independence, Kenya has enjoyed relative calm and many of its 42 tribes co-existed well. This happened against a backdrop of bickering, infighting and politically instigated uprisings accross the continent. Indeed, Kenya has been an island of peace in the sea of political turmoil.

The advent of multiparty democracy in Kenya saw the widening of the democratic space and with it came the increase freedom of expression. The media that had been strangled and gagged for a long time rejuvenated and reemerged with a renewed gusto to delve into issues bedevilling the country in a suscint, blunt and unwavery way.

As the media industry in Kenya grew by leaps and bounds, many became more informed on the goings-on in the political, social, and the business arena. The populace had now become greatly abreast with the issues affecting their lifes many bordering on bad governance, inherent grand corruption and blatant looting of public resource. This unending tirade of grand corruption has its epicenter in the ills of the Kenyatta administration that grabbed massive junks of public land alongside haemorrhaging of public assets and resources.

The unveiling of the Moi administration was seen as a ray of hope and light at the end of the tunnel on issues reform. Many were optimistic and expectant of radical shift in the paradigms that begat our leadership. Sadly however, hardly had the administration sat in office than another sweeping indictment of the administration was revealed. The cases of mega corruption had now been given a thrust and its tentacles now spread far and wide as public officers, cognizant of the public servants code of ethics, defiantly diverted public resources to private use.

The corruption that had eaten into every facet of the Moi administration was epitomized in the Goldenberg scandal that saw the country loose Billions in imports compensation.
Fast forward to 2002 and the political climate was so charged after exit of the hallowed baba Moi. Many including those in his inner circle didnot take kindly his open support of project Uhuru, then an amarteur in politicalspeak. This latter saw a wave of rebellion in government leading to the formation of the Rainbow Coalition and eventually NARC that resounding took power away from the party of the Cockerel-KANU with its project that was no match to the machinery of 'yote yawezekana'.

The unveiling of the Kibaki administration lend credence to the hope of fighting corruption as hundreds of thousands thronged the Uhuru Park to celebrate the resounding victory against the metaphoric Mugumo tree.

Theafter, and in a sudden change of events, the administration was dogged by the Anglo Leasing scam that encaptioned payments to fictitious companies through promissory notes. Sadly therefore, the administration had become an embodiment of corruption that tainted its leadership and the ghost still haunts some of them until today.

The administration oblivious of the resolve of its populace, and the resilience of their will went into the ballot again in 2007 for a second term though some of its members had ditched camp during the referendum to form the Orange Democratic Movement, ODM, that became such a force to reckon with upto the ballot.
Hordes of Kenyans turned up in large numbers to cast their vote though the tribal equation was now more evident than before.

The results became such a close game to call and each party was expectant of a resounding victory. As the results were announced Kibaki had 'won' and this did not augur well with the other camp that marshalled its troops for countrywide mass action that latter blurgeoned into full blow violence now famously know as the Post Election Violence. Several months latter over a thousand had died, several injured and hundreds of thousands displaced and became the Internally Displaced Persons.

Indeed, quite sadly and unprecedented, politics had wrecked havoc in our country and the effects are still being felt.
As the country reels from this unfortunate events, businesses have sufferred immensely as the economy was dealt a major blow. Further our risk assessment internationally was alterred and Foreign Direct Investment significantly reduced.

The stock market is at its lowest ebb and sadly it is a victim, a pawn in this roller coster called politics.

Anonymous Letter Alleges Improprieties at Equity Bank

Improprieties:
The last week was marked by revelations on the alleged improprieties at Equity Bank occassioned by a letter from an anonymous financial consultant and observed by Hon Khalwale among other M.Ps in Parliament.

Alleged Facts:
The anonymous letter Cpied to various concerned institutions) points out that millions of poor indigenous kenyans have been fraudulently robbed of millions of shillings through the listing of the banks shares at the NSE and gives the follows "facts";

Trade Bank Collapse:
1. James Mwangi, Equity CEO was the Finance Manager at Trade Bank, and part of the senior management team that supported Mr. Kassam before the bank collapsed with Billions of customer deposits.

Moved with Ksh 200M:
2. He moved with Kshs 200Million cash to Equity from the collapsed Trade Bank which he injected as capital supporting the resultant position of being the largest shareholder of the bank despite being only 42 years old.

Goldenberg Iquiry:
3. Mr. Mwangi was adversely mentioned inthe Goldenberg Inquiry.

Directorship:
4. From the above is he fit and proper under CBK guidelines to be a director of the Bank today?

30% shareholding:
5. He owns over 30% shareholding at the bank well above the 5% limit set by the CBK for a CEO, most of it in nominees accounts alleged held by the following members of staff:

Nominee Accounts:
Name: Designation: No. of Shares: Value:
Andrew Kimani General Manager 11.3M 1.6B
Mary Wamae Company Secretary 5.22M 730M
Gerald Warui General Manager 4.9M 686M

Bonus:
After the 2:1 bonus issue an employee earning kshs 400, 000 P.M would never build such a portfolio i nthe bank even in 200 years!

CBK and CMA?
How comes the CMA and CBK cannot see that they are just some of the nominees of James Mwangi?

Independent Directors:
6. Two Independent directors resigned from the board starting from the well respected Wanjiku Mugane of First African capital and now David Ndii citing serious corporate governance issues. Dr. Ndii is a highly respected development policy expert at the UoN with a PhD from Oxford University and previously worked at the world Bank.

Senior Staff Turnover:
7. Equity Bank has the highest senior staff turnover in the industry none stays for more than 1 year also citing serious corporate governance issues.

Exorbitant Prices:
8. The purpoted listing has been driven by the directors need to offload at exorbitant prices shares held in Asociate/Nominee names as their shares are bonded by CMA for 2 years hereunder for illustrations:

Dyer and Blair:
a) The principal shareholder of Dyer and Blair Investment Bank the leading broker on the shares is also a major shareholder of Equity Bank.

Kshs 70/Share Listing:
b) The listing was done at Kshs 70 Per Share, which was pushed to over 240 Per Share before huge bonus issue (2:1) ( capitalizing all revenue reserves) with subsequent share price then pushed to over Kshs 140 i.e. in simple monetary terms the value/ wealth of the directors has been multiplied more than 8 times in less than 1 year through the machinations at the NSE.

Front Running:
c) Clearly the share is being front runed/Spiked up poor kenyans are being duped to buy the share.

Industry P/E Ration:
d) Even the industry everage PE ratio of almost 60 times compared with similar institutions profitability base the share price at a reasonable industry PE of 15 should be around Kshs 30 Per share on the higher side but notKshs 140!

Hyped Media Bliss:
9. The hyped up daily unprecedented media bliss in Kenya's history is a cover up for all these fradulent activities to hype up the share price.

Unsustainable growth:
10. The bank is being pushed to grow at an unsustainable rate and indeed as observed by Hon. Members of parliament may go the same route Mr. Mwangi the CEO and friends of Trade Bank!
11. Former senior staff from CBK-Bank Supervision have been employed at the Bank to slow down any findings from CBK onsite inspection team.

Tip of the iceberg:
The letter alleges that this is only a tip of the iceberg and you may wish also to review how the Kshs 1Billion ICT, Branch expansion and overall procurement is being carried out that has prompted the 2 key directors and senior staff to resign; kenyans will be in for a big shock if you do not urgently intervene.

Yours Faithfully,

S.K. Patel

cc: -Governor CBK
-All fund Managers
-Commercial Banks
-Stock Brokers
-Capital Markets Authority
-PS Treasury