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Mobitelea saga: What do these men know?

Posted by African Press International on April 10, 2008

Publisher: Korir, api

By Gitahi Njeri

For the one last year, the ownership of Mobitelea, the ghost company that has an indirect shareholding at Safaricom has evolved to an enigmatic proportion with the mystery of its ownership deepening by the day.

Not even the investigation by Parliamentary Investment Committee (PIC) which probes public investments has been unable to unravel the mystery of the offshore company registered in the tax haven of the Island of Guersey.

The mystery deepened last week when Independent a UK paper reported that UK governments graft watchdog, Serious Fraud Office (SFO) has dropped investigations citing limitations of “resources”.

The statement from SFO announcing the decision said that SFO director Robert Wardle has the task of allocating resources, taking into account the prospects of success against the demands on resources.

It is with some difficulty that he has decided that the SFO will not adopt this enquiry for investigation” said the statement.

But lawyers have termed SFO decision a flat refusal to be involved in the search of the owners with the probable prodding of the owners of Mobitelea or Vodafone UK.

According John Amena Amendi, although off investors in Guernsey and other tax havens might offer guarantees to investors that their identities will be concealed this does not include a case where a crime has been committed.

On its part PIC, after months of investigations only released a report that recommended further investigation by Kenya Anti-Corruption Commission into the Mobitelea saga.

But in the course of investigation PIC hit the wall in its effort to unravel the mystery forcing it to ask for assistance from SFO. It should be recalled that on several occasions that UK has accused Kenya government of a half hearted efforts to fight corruption.

One of the problems that made PIC to call for help from SFO help was the obstinacy by Vodafone which declared that it was barred by a confidentiality agreement rules to discuss the ownership of Mobitelea.

As late as last week when SFO called of the probe, Vodafone was still clinging on to the same line on confidentiality as the reason it can not disclose the faces behind Mobitelea. The collapse of the SFO leaves Mobitelea owners hiding in the same veil that they have been hiding in before PIC and SFO began their investigations.

Kroll report

So far the only attempt to identify the Mobitelea ownership is the Kroll report which names key people with links to the former president Moi. The report names, Gideon Moi, Nicholas Biwott and Charles Field-Marsham, Biwotts son in law as shareholders in Safaricom.

But the accuracy of the Kroll report has being contested on the basis of the generalities it makes. On the case of Safaricom ownership, the report makes a sweeping statement that the trio owns 40 percent of Safaricom while the government owns the remaining 60 percent.

But the answers to the questions around the ownerships could be closer home than expected. If the traditional standards of the way government transacts business are anything to by then five politicians and two technocrats could have the keys to unlocking the mystery of Mobitelea. The five politicians, include people who have headed the Finance, and transport and communication ministries between 1999 to date while the technocrats served at one served as managing directors at Telkom Kenya between 1999 to 2003 when the deals surrounding the mystery were clinched.

The Kshs 20 billion question?

Curiously only one of these men have been quizzed over what they know about Mobitelea. Further none of them has been interrogated in what they know regarding the transfer of an additional 10 percent of the Safaricoms shares from Telkom to Vodafone Plc yet this could be the origin the Mobitelea saga.

From a casual observer, the two transactions appear unrelated but on a closer scrutiny have more similarities than differences. For example, when calculated at the current value of Safaricom, the value of the extra 10 percent that Vodafone acquired in unclear circumstance from Telkom translates to Kshs 20 billion.

Interestingly calculated on the same value, Vodafone Kenya stake at Safaricom is worth Kshs 80 billion. That means that when Vodafone gave Mobitelea a 25 stake in Vodafone Kenya, it also gave the ghost company a stake in Safaricom worth 20 billion.

Further, the order of events leading to the Mobitelea acquisition of the 25 percent stake in Vodafone Kenya and the reduction of the same stake to 12.5 percent is in itself very curious. According to its registration certificate Mobitelea was registered in July 18, 1999. Two months later on October, according to Telkom Kenya minutes submitted to PIC, Vodafone begins negotiations to increase its shareholding from 30 percent to 40 percent.

The following year, the 10 percent shareholding is transferred from Telkom to VKL. In 2002, which happens to be an election year, Vodafone allocates the 25 percent in VKL to Mobitelea. But on January 2003, when a new government has been elected into office, and only a few months later year later the transfer of the shares to Mobitelea, Vodafone buys back 12.5 percent leaving the ghost firm with only 12.5 percent which is equal to Kshs 10 billion of Safaricoms current value.

Besides in both transactions, it is not clear whether money changed hands in the deals. It is not clear whether Vodafone paid for the extra 10 percent that it acquired from Telkom and in the Mobitelea-Vodafone deal, although the latter has termed the former as a financial investor it is not clear whether Mobitelea paid anything to Vodafone. What is clear though is that Mobitelea is Kshs 20 billion rich in 2002 and Kshs 10 billion in 2003 through Safaricom.

In these two deals the treasury whose interest in these deals was held by Telkom might have lost more than Kshs 20 billion. Which raises question as to why the current government is not interested in investigating the saga? Do the people in the current government know something that we do not know?

The seven men and their secrets

As questions on Mobitelea continue to emerge, what these nine men know regarding the ghost company and behind the scenes deals that led to its stake in Safaricom remains close to their hearts. In the meantime Kenyans are scrambling for the Safaricom IPO.

Musalia Mudavadi,

The ODM number two who is also poised to take one of the twin positions of deputy prime minister in the grand coalition government was a minister of transport and communication in 1999 and 2002 when Mobitelea was born and earned a fat fortune from Kenyas goose that lays the golden egg. It is under his ministry that Kenya Post and Telecommunication (KPTC) the predecessor of Telkom Kenya fell. As a minister he must have been briefed by his permanent secretary of the impending sale of the 10 percent stake of Telkom shares in Safaricom to Vodafone. As such he must have known whether or not Telkom was paid for the additional 10 percent it ceded to Vodafone in Safaricom. The MP for Sabatia must also have been briefed on Vodafone intention to bring on board Mobitelea in the deal.

Curiously Mudavadi has been conspicuously silent on Mobitelea when his ODM counterparts have been vocal on the mystery of Mobitelea.

When we tried to reach him for comment on the saga, Mudavadi was said to be holed up in meetings. But Kibisu Kabatesi his personal assistant quickly rushed to defend him saying he could not have been aware of anything on the saga as he only held the agriculture docket after 1997 general election. However, even Mudavadis personal website confirms that he was moved from Agriculture in 1999 to Transport and communication before the ministry was renamed ministry of transport, information and communication.

Chris Okemo

The MP for Nambale was in charge of finance docket when the mystery began. As the minister for finance he was represented in the board of Telkom by Treasury permanent secretary of the time. He must therefore have been briefed on the impending change of share structure in Safaricom where Telkom was ceding an extra 10 percent to Vodafone. Okemo is therefore best placed to say whether Vodafone actually paid for the 10 percent stake. PIC dismissed as a work of fiction a letter tabled by Michael Joseph claiming that Vodafone had paid US$ 22 million for the 10 percent.

Similarly he must have known that Vodafone was bringing on board Mobitelea as a shareholder in Vodafone Kenya Limited. He was the finance minister when 10 percent Telkom stake was transferred to Vodafone. Like Musalia, Okemo has remained mum on the saga.

It is very unlikely that the two deals especially the transfer of the extra 10 percent shares from Telkom to Vodafone went on without the approval of the Cabinet. If the deals were approved at Cabinet level, certainly it had to have been raised by either Okemo or Mudavadi

Amos Kimunya,

The current minister took over the ministry of finance from Daudi Mwairaria when the government was moving to offload its stakes in Safaricom and Telkom. It has been during his tenure in the first five years of Kibaki administration that government delegation flew to UK to negotiate the sale of 9 percent of its stake in Safaricom to Vodafone. It is also during his tenure that the Mobitelea controversy emerged.

Confronted with questions over Mobitelea, Kimunya has had two distinctive positions. At one point he had said that was not interested in the ownership of Mobitelea since it was a only a part of the Vodafones stake in Safaricom. But recently, the minister has changed his position saying that the government would investigate who the real owners of Mobitelea are.

Mutahi Kagwe

The Mobitelea controversy came to the public limelight in the tenure of this immediate former minister for information and communication and MP for Mukure-ini. It was during his tenure that the government fast tracked plans to sell part of its stake in Safaricom. Part of the process involved governments negotiations with Vodafone Plc in a bid to sell 9 percent of its stake to the UK based company.

It was also during his tenure, last year, that PIC began its investigation of the Mobitelea saga. In the course of the investigation, there were claims by members of PIC that Kagwe had spoken to them urging them to drop the probe because it is hurting some of our friends. Incidentally, at the time that PIC was conducting the probe; the government was trying to woo some members of then opposition KANU to bolster its (government) weakening strength in parliament.

John Michuki

The non-nonsense minister replaced Mudavadi in the transport and communication ministry before president split it in transport and information and communication as separate ministries.

In January 2003, when Vodafone acquired back 12.5 percent stake from Mobitelea, Michuki had taken over as the minister.

John Waweru,

The Communication Commission of Kenya (CCK) director general was a member of Telkom board for the three years when the negotiation with Vodafone over an extra 10 percent in Safaricom. That means that he sat in the meetings when Telkom was discussing the extra 10 percent deal.

In 2003 he was appointed the managing director. Both the controversial deals were okayed when he was still a board a member before being elevated to the position of the Managing director and later to his current position in CCK.

As a board member at Telkom he must have known whether Vodafone really paid for the extra 10 percent shareholding in Safaricom or not.

Augustine Cheserem

Cheserem was the managing director at Telkom Kenya when the deals began. He had just replaced the former managing director of the old KP&TC Jan Mutai in the climax of the telecommunication reforms. Cheserem sat through the meetings that discussed and agreed to cede the extra 10 percent to Vodafone. As the chief accounting officer he knows whether Vodafone paid for its new stake or not.

He was also at Telkom in the same position when Vodafone Kenya Limited shareholding structure changed to accommodate Mobitelea. According to the partnership agreement, the two shareholders in Safaricom were supposed to notify each other on the change of shareholding in their structures.

Limited mandate

Asked why PIC team did not interview these people in its investigation, Justin Muturi who chaired the committee in the last parliament explained that his committee could only question people who are holding relevant positions at present while the rest should be investigated by other government agencies. This explains why the committee in its report recommends that Kenya Anti-corruption Commission conducts further investigations.


African Press International – api

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