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Tuesday, November 28, 2006

Safaricom, The Bitter Option

A new twist to the Safaricom saga. According to the East African, Mobitelea Ventures Ltd. was, at least till 2000 a non-trading arm of Telkom Kenya. It would seem then that Mobitelea acquired a stake in Vodafone Kenya Ltd. (which by then was wholly owned by Vodafone Plc) sometime between March 2001 and May 2002. This implies either of two things.

One, that Telkom, through Mobitelea and using public money, bought shares in VKL thus increasing its effective shareholding in Safaricom to 70% without informing the public. It then sold the equivalent of 5% of that shareholding back to Vodafone Plc generating $10 million and again failed to report this. It would also mean that contrary to its declarations, Telkom actually effectively owns 65% of Safaricom and is trying to hide that 5% from us.

Or two, Telkom had by then quietly sold (or given) Mobitelea to someone who then managed to convince Vodafone Plc to sell them a piece of VKL on the hush-hush. This begs many questions. Whom did Telkom sell (or give) Mobitelea to (a search conducted by The EastAfrican at the Company Registry to determine ownership or directorship of Mobitelea Ventures came up with nothing), why and for how much? Were the proceeds declared in the company's accounts? Can Telkom so easily dispose of a public asset without informing anyone? Why doesn't the company come clean and reveal whom it sold (or gave) Mobitelea to?

The fact that Mobitelea is now said, again according to East African, to be associated with Mo1 and his clique suggests that the latter may be the case. If so, then there is a clear suggestion of solicitation. According to Justin Muturi, chairman of the Public Investments Committee of parliament, Vodafone Plc acquired the stake in Safaricom without going through a competitive bidding process. Was this because they forged a thieves' bargain to subsequently sell (or give -I haven't come across any evidence that Mobitelea actually paid anything for a stake in VKL and neither has Muturi) some of those shares to Mo1 and his crew? Why did Vodafone agree to buy back its shareholding in VKL so soon after disposing of it?

Whichever way one looks at this, and contrary to pesa tu's protestations, it stinks to high heaven. His extremely simplified shareholding structure, which leads him to conclude that "only the shareholders of the involved parties VKL, Vodafone Plc and Mobitelea Ventures ( as opposed to Telkom shareholder, Joe public) can. . . . be aggrieved", is only fit for simpletons.

4 comments:

coldtusker said...

It gets interesting... note how the government is keeping quiet... they want the whole issue to die out...

Someone asked why is the UK govt doing nothing... well, they can't investigate until a crime is reported!

pesa tu said...

Hi Gathara,
the aim of my post was to illustrate how the Mobitelea/Safaricom sharehoder structure could be set up.

My aim was not to condone graft or any wrongdoing.

If there's any wrongdoing the law must take its course.
See more on my post

Wallace said...

Let us assume that Mobiltea is registered in another country (don't try the UK - I suggest closer to home, the "ea" in Mobiltea being a clue).

Let us assume that the deal between Vodafone and Mobiltea may have flown "below the radar" of Kenya's laws. Nothing ilegal about giving a reward to a fried who helped you set up you business, right?

Even if that friend happens to be a public servant (a term you don't hear much these days) using his position to enrich himself. Unethical and immoral, but perhaps not criminal.

I would not look to a court of law on this, but rather to the court of public opinion, which is even more powerful. Kenya cannot afford to have the telecomm industry beholden to corrupt individuals.

The question is, who is behind Mobiltea?

I'll give you two hints:
1. Look for people who were well connected in the Moi days. (And still are!)

2. Look at the board of Safaricom. Look for people with close ties to people in the Moi government, for example, close relatives.

Safaricom: the "total" option?

Gathara said...

pesa tu,
I accept that you are not seeking to protect anyone. However you did state the view that, in your opinion, there was no wrongdoing. You also stated that there was no injury to the public interest. That is what I am disputing.

Wallace,
I do not see why we need to make the assumption that Mobitelea is a foreign company. The east African clearly states that the company was owned by Telkom in 2000. It is a Kenyan company and since the records are missing, it may very well still be owned by Telkom which would raise numerous issues.

As for the illegality or otherwise of any Mobitelea/Vodafone deal, I am no lawyer but I'm pretty sure that using a public position to enrich oneself constitutes abuse of office and any inducement paid to a public servant to secure an advantage is illegal and punishable under our statutes.

But I do agree with you that whether they get away with it or not depends on the verdict in the court of public opinion. “Liberty lies in the hearts of men and women; [if] it dies there, no constitution, no law, no court can save it” said US Judge Learned Hand. Same can be said of transparency, accountability and all other facets of just governance.