KCB Group’s bid to acquire Kenya’s troubled National Bank has run into strong headwinds following claims that the deal is being done in violation of the rules governing the sale of state-owned companies.
Opponents of the sale say that Kenya’s National Treasury, which is handling the transaction, has not complied with the privatisation law, and is proceeding with the sale without the involvement of the Privatisation Commission — the agency that oversees the sale of all state assets, including mergers. The commission is required by law to execute each privatisation proposal that the Cabinet has approved.
But Dr Paul Otuoma, who chairs the commission, said that the agency has had no role in the planned sale.
"We have not been handling this transaction. It is important that the relevant agencies are informed accordingly when there is a change in government policy," Dr Otuoma said.
Kenya’s Treasury Cabinet Secretary Henry Rotich did not respond to our calls and text messages on the transaction.
The proposed sale has also become the subject of parliamentary investigation in the wake of a petition by an MP.
The Kenya National Assembly’s Finance and Planning Committee has opened investigations into the proposed takeover with a view to establishing whether the assets have been valued correctly, and the interests of pensioners, employees and taxpayers are protected.
The investigation also aims to establish whether the transaction was subjected to public participation or merely a boardroom decision that is being driven by Treasury mandarins.
The committee must finish the work and submit a report to the House within 60 days.
Kenya’s privatisation law requires every merger or acquisition involving state entities to be approved by Cabinet and parliament, and then gazetted before the commission is brought in to execute it. Such transactions should also be subjected to public participation.The Privatisation Act (2005) prohibits the transfer of a public entity’s interests in a state corporation without being included in the privatisation programme, calling into question the legality of the ongoing process.It has not helped that the planned sale contains clauses that are likely to hurt other National Bank shareholders, including the National Social Security Fund and ordinary investors with stakes in the bank through the Nairobi Securities Exchange.Fresh details of the deal indicate that the National Treasury is pushing for conversion of preference shares held in National Bank into ordinary shares, a move that will significantly dilute minority shareholders and workers’ savings held in the […]