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"id": 201971,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/201971/?format=api",
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"type": "speech",
"speaker_name": "Mr. Muturi",
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"speaker": {
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"legal_name": "Justin Bedan Njoka Muturi",
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"content": "Mr. Speaker, Sir, just before we adjourned last week on Thursday, I was putting the case that the shadowy company referred to as Mobitelea Ventures was registered on 18th June, 1999 whereas the shareholders agreement had been concluded on 25th January, 1999. In the shareholders agreement, it had been pointed out that Vodafone PLC or Vodafone Kenya Limited, which is a subsidiary of the former, held an equity of 30 per cent and that Telkom Kenya held 70 per cent. According to the letters from Gavin Derby to the Committee, he says that in 2000 they came by Mobitelea Ventures, a company registered in Guernsey. By the time they came by this company, already the shareholders agreement had been signed and concluded. Therefore, to say that they were given the 10 per cent by Vodafone for their valued advice on local business protocols and practices, is a matter that raised a lot of concern to the Committee. It also exercised the minds of hon. Members because it was not possible that this company could have been advising Vodafone PLC before it was formed. We agreed that also Telkom Kenya failed in its statutory duty to ask for permission from the parent Ministry to reduce its shares from 70 per cent to 60 per cent. In turn, the parent Ministry was expected, as is the law, to seek authority from Treasury to reduce the 70 per cent hold to 60 per cent. Mr. Speaker, Sir, Clause 12.3(a) of the Shareholders Agreement says: \"That, if a shareholder wishes to sell any part or all his shareholding in Safaricom, such shareholder shall notify the other parties in writing and show the number of shares to be sold, the transfer price, identity of the person offering to purchase and other terms and conditions. That, offerees shall have the right of refusal to purchase the shares pro rata of their respective shareholding.\" It, therefore, means that in terms of this clause, Vodafone PLC, who have admitted in their own letter that they sold a part of their shares to M/s. Mobitelea Ventures, did not disclose that part to Telkom Kenya who are the other shareholders. Also, Telkom Kenya Limited failed in their duty in terms of this agreement to find out from Vodafone PLC, who the person they are calling M/s. Mobitelea Ventures were as is supposed to be the case. Mr. Speaker, Sir, in fact, I do appreciate the fact that the Government has gone to great lengths in trying to persuade Vodafone PLC to allow it to off load some of their shares. Indeed, it is provided that the offerees shall have the right of first refusal to purchase the sale shares pro rata their respective shareholdings. Such rights must be exercised by giving notice in writing to the transferals within 30 days of the date of receipt of the transfer notice. It, therefore, means that Telkom Kenya were negligent in not finding out from their fellow shareholders, indeed, the majority shareholder, to whom it is, that they were off-loading part of 4264 PARLIAMENTARY DEBATES October 2, 2007 their shares to and yet these were shares that they held in trust for the public of Kenya. Mr. Speaker, Sir, it was observed by the Committee that, at one point during the course of taking evidence, there were some deliberate efforts to mislead the Committee in its endeavour to investigate this matter. For instance, there was produced before the Committee a letter dated 26th May, 2000 tabled before the Committee by one, Mr. Michael Joseph, ostensibly, from Vodafone Kenya Limited forwarding a bankers draft of US$22 million and claiming that Vodafone Kenya Limited had paid its part of licence fee which was later found to be fictitious as it purported to use the postal address of VKL as P.O. Box 40034-00100, Eighth Floor, Lonrho House, Nairobi. It is common knowledge that as at that date of the year 2000, Kenya as a whole had not effected the postal coding of 00100. It only made it appalling that Vodafone PLC, a company registered in the United Kingdom (UK), involved itself in underhand activities of corrupt nature aimed at depriving Kenyan citizens of billions of shillings through M/s. Mobitelea Ventures, despite the fact that the UK has been one of the countries in the forefront of campaigning against corruption in developing countries. Yet, this is a company in their own country which was engaged in this kind of murky affairs. Mr. Speaker, Sir, it was evident also that despite the fact that Safaricom is a capital investment, Telkom's Board of Directors later obtained, as I said earlier, the requisite sanction of the parent Ministry or Treasury to reduce the shareholding in that company. Furthermore, the Registrar of Companies did inform the Committee that even the records of the known shareholder, Messrs. Vodafone Kenya Limited abbreviated as VKL which is a subsidiary company of Vodafone PLC and which is said to own 40 per cent of Safaricom, have since inexplicably disappeared from the registry. She further told the Committee that she was not able to locate that file. However, be that as it may, it was worth noting that despite the huge profits that the company has made in the past few years, Telkom Kenya did not receive any cash dividend while M/s. Mobitelea Ventures has continued to enjoy annual cash dividends. The first dividend to shareholders was approved in the year 2006 following a net profit of Kshs8,425,436,000. Subsequently, the shareholders approved a dividend of Kshs2,991,673. Of this amount, Vodafone Kenya Limited was paid a cash dividend of Kshs1,196,699,000 while Kshs1,795,300,759 payable to Telkom was used to offset alleged obligations that Telkom had to Safaricom. Safaricom recorded a net profit, in the subsequent year, of Kshs12,010,431. This has been recorded this year. It is noteworthy that the financial year for Safaricom ends at the end of February of each year. Subsequently, a dividend of Kshs4 billion was proposed. Out of this amount, it was not indicated how much, as of the time we took evidence, would go to M/s. Mobitelea Ventures. Mr. Speaker, Sir, in view of the fact that the Committee is oblivious of the net amount or amounts owing from Telkom to Safaricom, it is not possible to ascertain or report to the House whether Telkom will receive any cash dividend in the foreseeable future. Against this backdrop, it would, therefore, be gratuitous, indeed, for Telkom or even the Government to delight in news of the huge profits that are reported year in, year out by Safaricom Limited. I want to report to the House that this is a matter that Members of the Committee constantly and rightly, I believe so, described as \"A murky case of grand corruption\". The Committee heard that there appears to have been a conspiracy by some officers in Government, particularly in the Ministry of Information and Communications, the officers of M/s. Mobitelea Ventures who are known to be nominee companies registered in the tiny islands of Aguilla and Antigua, Vodafone PLC and Telkom Board to defraud the public of its shares in Safaricom. Mr. Speaker, Sir, neither the management of Safaricom Kenya Limited nor that of Telkom Kenya Limited could produce the written request by Vodafone PLC for increase in Vodafone's PLC shares from 30 per cent to 40 per cent. This supposition is further affirmed by the unexplainable disappearance of the records of Vodafone Kenya Limited from the Office of the October 2, 2007 PARLIAMENTARY DEBATES 4265 Registrar of Companies. Against that background, the Committee, therefore, recommends as follows: That the Director of Kenya Anti-Corruption Commission (KACC) immediately---"
}