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"type": "speech",
"speaker_name": "Sen. Kathuri",
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"content": " Sen. Okenyuri, you are to first move the Motion."
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"speaker_name": "Sen. Okenyuri",
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"content": "Mr. Deputy Speaker, Sir, I want to move this Motion by actually a background."
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"type": "speech",
"speaker_name": "Sen. Kathuri",
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"content": " Get assistance from the clerks-at-the-Table."
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"type": "speech",
"speaker_name": "Sen. Okenyuri",
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"content": "Okay."
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"content": "(Sen. Okenyuri consulted the Clerks-at-the-Table)"
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"type": "speech",
"speaker_name": "Sen. Okenyuri",
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"content": "Thank you, Mr. Deputy Speaker, Sir. I beg to move the following Motion- THAT the Senate adopts the Report of the Standing Committee on Trade, Industrialization and Tourism on a Petition to the Senate regarding alleged fraudulent dealings at Diageo PLC, East African Breweries Limited, Kenya Breweries and UDV (Kenya) Limited, laid on the Table of the Senate on Thursday, 5th December, 2024. Now that I have moved the Motion, I want to give a background of this Petition. At a sitting held on 30th May, 2023, a Petition was reported by Sen. Wakili on behalf of the Petitioner, Mr. Rono Nicholas, from Bomet County, pursuant to Standing Order No. 236(2). Specifically, the petitioner was highlighting the following: (1) That there has been controversial majority acquisition of shares of East Africa Breweries Limited (EABL) by Guinness Public Limited Company (PLC) in 2000, which was strongly resisted by the people of the Republic of Kenya through Parliament. (2) The other concern was having knowledge of the dealings at Capital Markets Authority (CMA), the Kenya Revenue Authority (KRA), the National Treasury and EABL have not acted to correct or stop fraudulent activities of shareholding and acquisitions. (3) To deflect some of the backlash, Guinness PLC made a pledge to cede back most of the acquired shares to Kenyans in due course. (4) Recent acquisition of the extra 15 per cent in EABL is a fraud upon the people of Kenya as the shares are being acquired for an onward transfer to a new buyer at a much higher value for the benefit of shareholders and to the detriment of Kenyan shareholders who will be denied the benefit of the higher price that Diageo will get from onward sale shortly. (5) Employees of EABL have been bullied, coerced, threatened and otherwise intimidated to sell their share options to Diageo PLC, which is against the laws of Kenya. (6) There was an onward sale of Diageo interest in EABL as agreed with Heineken /Castle Group. Purchase of an additional 15 per cent shares is meant to ensure that Heineken /Castle Group has a controlling stake in EABL after the onward sale. (7) The Kenya Breweries Limited (KBL), which was locally owned, possessed massive real estate in Kenya that comprised staff houses and complexes, go-downs, warehouses, factories and other assets that had employed over 6,000 Kenyans. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
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"speaker_name": "Sen. Okenyuri",
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"content": "(8) EABL has corruptly disposed most of its properties and repatriated the sale proceeds to Diageo PLC. EABL is now a mere shell of itself, employing a paltry 600 employees. (9) Finally, the petitioner had made efforts to have this matter addressed by relevant authorities, but all of which have been unsuccessful. This matter was not pending before any court of law or any constitutional body. (10) The petitioner, therefore, prayed that the Senate investigate with view to recommending amendments to the Capital Markets Authority Act to cushion the shareholders from future manipulation. The Committee acknowledged the contribution by the petitioner, CMA, EABL, Competition Authority of Kenya (CAK) and the KRA for their detailed submission to the committee, which made consideration of the Petition a success. Further, the Committee thanks the offices of the Speaker and the Clerk of the Senate for the support extended to the Committee in execution of its mandate. I also appreciate Members of the committee for their patience, sacrifice and commitment to public service, which enabled the Committee to complete the assigned task. To enable a judicious disposal of the Petition, the Committee conducted an investigation and engaged with all relevant institutions and persons of interest in addressing issues raised in the Petition as follows. We had the petitioner, the Capital Markets Authority, Competition Authority of Kenya, KRA and the KBL. The following are the submissions we drew as Members of the Committee. (a) With respect to the 1997 EABL acquisition by Guinness PLC; EABL sought to raise Kshs1.5 billion from existing shareholders through a rights issue. At that time, the Guinness PLC held 25.06 per cent of the ordinary shares of EABL and was the underwriter for the rights issue. Subsequently, the shareholding of Guinness PLC increased to 46 per cent thereby making it the largest single shareholder in EABL. (b) Following an internal reorganization in 2000, Diageo Kenya, a subsidiary of the Diageo PLC, increased its shareholding in EABL to 50.03 per cent through the consolidation of shares from Guinness Overseas Holdings Limited and Diageo Holdings Netherlands BV with no change in beneficial ownership. (c) In October 2022, Diageo PLC announced plans to raise its stake in EABL from 50.03 per cent to 65 per cent. The CMA approved this acquisition on 23rd January, 2023, which reduced local shareholding in EABL to 35 per cent. (d) The tender offer was oversubscribed, receiving requests for 143.52 million shares against the 118.39 million that were sought. The attractive offer included eligibility for an interim dividend of Kshs3.50 per share. (e) Diageo's acquisition of additional 14.97 per cent stake did not classify as a merger under the Competition Act, since this did not change beneficial ownership. Diageo was already a majority shareholder. (f) In Kenya's alcoholic beverage sector, where there are no statutory limits on foreign ownership, Diageo's increased to a 16 per cent stake control without restrictions and there being no evidence that Diageo Kenya intended to acquire shares of resale to Heineken /Castle Group or any other buyer. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1523679,
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"speaker_name": "Sen. Okenyuri",
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"content": "(g) EABL has sold several assets as part of its realignment strategy. However, allegations that these sales were to finance operations remain unproven. (h) The CAK received complaints regarding anti-competitive practices by KBL and EABL, holding 90 per cent and necessitating stricter enforcement of penalties under Competition Act. (i) EABL has unresolved task disputes with the KRA and at various stages, but there are no pending disputes involving Diageo PLC. The Committee then recommends that- (1) The CMA to monitor compliance with the capital markets that public offers, listings and disclosures under Regulations 2023 and within six months of tabling of this Report, submit a report to the Committee on the status of implementation and compliance with the said regulations. (2) The CMA engages and sensitizes the public on the provisions of the regulations in (i) above and demonstrates the initiatives taken in this regard in the report to be submitted to the Committee. (3) The CAK should enforce the pecuniary penalty outlined under Section 24(3) of the Competition Act of 2010 for abuse of dominant position to deter breach of competition rules and promote fair marketing practices for all players. (4) Enforcement of the pecuniary penalty is likely to be more expedient and deterring repeated abuse of dominance. (5) The CAK, within six months of tabling of this report, submits a report to the Senate on reported cases of abuse of dominant position in the period between 2023 to 2024 and the respective measures and decisions taken by the Authority to resolve the cases. Mr. Deputy Speaker, Sir, it is now my pleasant duty and privilege on behalf of the Committee to present this Report of the Standing Committee on Trade, Industrialisation and Tourism on its consideration of the Petition by Mr. Rono Nicholas concerning fraudulent shareholding activities and illegal acquisition of EABL by Diageo PLC. The Report is signed by the Senate Standing Committee on Trade, Tourism, and Industrialisation. I thank you."
},
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"type": "speech",
"speaker_name": "Sen. Kathuri",
"speaker_title": "The Deputy Speaker",
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"legal_name": "Murungi Kathuri",
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"content": " Who is seconding your Motion?"
},
{
"id": 1523681,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1523681/?format=api",
"text_counter": 180,
"type": "speech",
"speaker_name": "Sen. Okenyuri",
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"speaker": null,
"content": "Mr. Deputy Speaker, Sir, allow me to request Sen. Cherarkey to second this Motion."
}
]
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