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Former Treasury CS Rotich grilled over Telkom, Airtel merger

By Eric Wainaina
Wednesday, September 4th, 2019
Former Treasury Cabinet secretary Henry Rotich. The anti-graft agency grilled him yesterday over his role in the planned merger between Telkom Kenya and Airtel Kenya Photo/PD/FILE
In summary
  • The woes facing former Treasury Cabinet Secretary Henry Rotich seem to be piling after detectives yesterday grilled him over his role in the planned merger between Telkom Kenya and telecommunications firm, Airtel Kenya.
  • Telkom is majority owned (60 per cent) by the UK-based private equity firm Helios Investment Partners, while the Kenyan government has a 40 per cent stake. The agency believes there is a third shareholder whose identity must be made public.
  • The House committee chaired by Narok North MP Moitalel ole Kenta, invited the relevant government agencies to appear before it to shed light on the merger that industry players say is aimed at taking on the dominant industry player.
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The woes facing former Treasury Cabinet Secretary Henry Rotich seem to be piling after detectives yesterday grilled him over his role in the planned merger between Telkom Kenya and telecommunications firm, Airtel Kenya.

Rotich, who was in July forced out of office after being arraigned over corruption claims linked to the multi-billion-shilling Kimwarer and Arror dams scandal, was questioned alongside West Pokot Senator  Samuel Poghisio. 

The two, according to intelligence sources, spent eight hours at Integrity Centre, the headquarters of the Ethics and Anti-Corruption Commission, responding to questions from detectives who recorded their statements over the controversial planned merger.

 Rotich was in charge of Treasury when the Telkom-Airtel merger was mooted. In December 2007, a restructuring  exercise of Telkom  Kenya  started under Poghisio as Information and Telecommunications minister in President Mwai Kibaki’s administration.

It saw the firm bought by France Telcom( now Orange SA), which acquired 51 per cent of the stake at Sh26 billion.  However,   in 2014, National Assembly ‘s Public Accounts Committee(PAC) dismissed the deal as a kin to share- fixing because the government only got Sh2.5b of the required Sh4.9b. 

Several officials at Treasury and ICT ministries, including those who have since left office, are scheduled to be questioned over the merger,  which the National Assembly has described as a scandal where private individuals are buying off a public entity through the back-door.

The anti-graft agency says it has asked Telkom Kenya chief executive officer Mugo Kibati to give a detailed statement on the matter as detectives seek to crack open what they believe to be a multi-billion shilling scandal.

Senior government officials told People Daily that EACC wants the merger stopped on grounds that the government will not get value for money, since besides being shrouded in secrecy, government stake in Telkom Kenya will fall from 40 per cent to 15 per cent.

“The expected dilution of the government’s stake in Telkom is a big concern. We want to know why the government shares will reduce by over 25 per cent after the merger,” EACC boss Twalib Mbarak said yesterday, adding that the issue of privatisation of government agencies has something to do with ministries.

Of interest to investigators is the identity of the new shareholders who will take over Telkom, following claims that a third mysterious company is part of the deal signed on February 8, and which Kenya’s leading telecommunication firm Safaricom, has been fighting.

Third shareholder

Telkom is majority owned (60 per cent) by the UK-based private equity firm Helios Investment Partners, while the Kenyan government has a 40 per cent stake. The agency believes there is a third shareholder whose identity must be made public.

Last month, when he appeared before the National Assembly, EACC director of investigations Abdi Mohamud said top officials from Treasury and the Information, Communication and Technology (ICT) ministry as well as any other individuals who sanctioned the deal would appear before the agency.

According to Abdi, anybody mentioned in the deal which was suspended last week, would be treated as either  witness or  suspect and will be required to record a statement on what they know about the planned merger.

“I would like to say that anybody mentioned in this deal will have to record a statement on what they know about it. We expect the preliminary investigations to be concluded within the next one month,” he said.

The commission is also seeking to establish the value of Telkom, with the agency maintaining that the firm’s true worth has not been made public. According to EACC, a 2014 valuation of Telkom estimated its value at Sh50.98 billion. 

In March, the National Assembly Committee on Implementation termed the merger a scandal where private individuals are buying off a public entity through the backdoor since not even the Office of the Attorney General was involved in the initial merger plans.

The House committee chaired by Narok North MP Moitalel ole Kenta, invited the relevant government agencies to appear before it to shed light on the merger that industry players say is aimed at taking on the dominant industry player.

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