Capital Markets Authority ponder Sh4b Britam shares jury
Billionaire businessman Peter Munga could find himself between a rock and a hard place after Capital Markets Authority (CMA) moved to establish whether he irregularly purchased Britam shares from Mauritius, analysts have said.
Mauritius recently alleged that Munga cost it Sh3.9 billion after purchasing 452.5 million Britam shares from the island nation at Sh7.1 billion, by beating other bidders who had offered up to Sh11 billion for the same.
Following the revelation, CMA began a probe into the deal by summoning the directors of Britam Holdings to a meeting which was set for last week.
CMA chief executive, Wycliffe Shamiah told a regional newspaper that the regulator had scheduled the meeting with Britam to understand if there are regulatory matters.
“What we know is that the government in Mauritius feels its officers were compromised when clearing the transaction but our investor indicates that it was based on negotiations,” Shamiah said.
However, CMA did not shed more light to the inquiry to Business Hub, saying it would do so once investigations are over.
But even as the probe goes on, analysts say that Munga who is Equity Bank founder could land into trouble if found culpable.
Former Kenya Association of Stockbrokers and Investment Banks (Kasib) chair John Kirimi says the regulator could sanction Munga as an individual as well as the company that sold the shares.
He said this could easily leave Munga being slapped with insider trading charges by CMA if the regulator establishes he acquired the shares based on insider information.
“If he had some insider information and acted on the basis of that, or he caused somebody else to act on the basis of that then he would be liable. In fact, you can be criminally liable,” Kirimi said.
AKirimi said a person found liable of insider trading can be fined double the amounts of his gain, put to jail, or even barred from trading at the Kenyan capital markets. CMA could even repossess shares of an offender who fails to pay a fine.
“They have quite a series of punishments which they can mete out to an offender,” he said.
Samuel Nyandemo, a senior economics lecturer at the University of Nairobi, concurred with Kirimi saying that CMA could repossess the shares where a buyer is determined to have acquired them fraudulently.
“The best way is to repossess them so that it becomes company property,” he said.
In 2019 CMA penalized former CEO of Kestrel Capital, Andre Desimone, and two Kestrel stock broking agents, Aly Khan Satchu and Kunal Kamlesh over insider trading insider trading of Kenol Kobil shares prior to the takeover announcement being publicized in October 2018.
The Authority imposed on the three enforcement actions ranging including financial penalties, disgorgement from commissions and disqualification from holding senior position as a key officer or director of a listed company or other institutions under CMA.
Appeals against the enforcement actions are pending at the Capital Markets Tribunal and Court of Appeal.