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Tuesday, October 2, 2007

Let's tell Kenyans the truth when it comes to privatization

It is no secret that for a collective total of nearly 30 consecutive years, Moi and Kibaki have placed Kenyan public assets on sale, literally at throw-away prices; to their kin, personal companies, and friends, locally and abroad.

Sometimes, the fortitude and patriotism shown by forthright Kenyans have succeeded in stalling their bid to throw away our public assets for a song, and in other instances , we have failed to stop their discounted give-away of national jewels - through their use of state machinery, including a corrupted Parliament.

History repeats itself in quite interesting ways.

We can remember how the Kenyan public lost its 49% stake at Firestone EA (held under the state corporation ICDC) to one scrupulous "enterpreneur" called Naushad Merali and his so called Sameer Investments company in 1995.

In 1995 Moi ordered the now defunct PRC (Parastatals Reform Committee) to recommend that ICDC offloads its 49% Firestone shares at the NSE. That was just a gimmick, because according to the Auditor General (Corporations 1996 Report), "Naushad Merali and his Sameer group got pre-emptive rights and bought all those shares for Sh. 100 million."

Their true value according to the Auditor general was Sh. 500 million. But wait a minute; three years down the line in 1999, the same shares were re-floated and sold at the NSE for Sh. 1.5 Billion. Merali made a 1500% profit in 3 years. Merali's genius in all this is the genius of grabbing and looting, since he could have still made profit by buying the shares at their regular value.

Merali's Sameer then used the money to buy East African Cables from a British Holding company in 2000 for Sh. 110 million when Moi refused KPLC & KenGen from buying the British company's electric cables (economic sabotage). EA Cables's true value at the time was Sh. 274 million.

Fast Forward to 2003. The first acquisition by Kibaki and his cronies at Trans-Century was the purchase of East African Cables from Merali. Kibaki had by then simultaneously appointed Trans-Century's godfather Eddy Njoroge as KenGen's Managing Director (overt & unveiled conflict of interest). The rest is history; you know how EA Cables & Ken-Gen are performing at the NSE.

Track down the business interests of Trans-Century and you will see the Sharks, Homeguards and Sultans partitioning and selling Kenya under the guise of privatization.

In the twilight months of Moi's Presidency, just before Kibaki came to power, Moi had a rush to dispose off (sell for ten pieces of silver) Kenyan public assets in a frenzy that astounded many. In the twinkle of an eye, Kenya-Re and Telkom shares were being offered for sale at exorbitantly discounted rates.

The disposal of these Kenyan public assets was riddled with overt corruption, mainly through gross undervaluing of the entities. Coincidentally, at the epicenter of the privatization exercise in the late 90s and early 2000s was Nicholas Biwott's daughter, Ms. Esther Koimett, the then Investment Secretary, whom Kibaki found prudent to serve as Kenya's new Investment Secretary, thanks to his renewed political dalliance with Nicholas Biwott.

In 2000-2001, Esther Koimet almost facilitated the sale of Kenya-Re (a public asset) to Zim-Re (of Zimbabwe ) in partnership with Monarch Insurance (owned by Gideon Moi) for less than one third it's value. Gideon Moi and his shielders at Zim-Re almost bought the entire Kenya-Re for 800 million shillings when it was valued at more than 2.5 billion shillings in 2001.

Who halted the sale?

After the Parliamentary Investment Committee (PIC) failed to stop the sale on procedural grounds, three MPs filed a successful court injunction blocking the sale: Prof. Anyang Nyongo, Wafula Wamunyinyi and Musikari Kombo. The ruling was made by Justice Hayanga.

Thanks to the three MPs, we were luckily to have survived the transfer of Kenya-Re into the hands of Gideon Moi in exchange for ten pieces of silver.

But we were never always lucky; we lost some battles to the Moi privatization frenzy.

Telkom had off-loaded much of it's shares in Safaricom (the mobile phone giant) to Vodafone, and within the shady transaction, a secretive entity known as Mobitelea (Moi Biwott Telecommunication East Africa ), controlling 5% stake in Safaricom was born. Kenyans failed to read and pre-empt the illegal transfer of public assets into the hands of political families without their paying of a single dime. The Moi family and their two little partners in Mobitelea raked in Sh. 850,000,000 last year alone, thanks to that illegal transfer. The money is at their disposal to bribe weak and unprincipled political leaders, to create further confusion in the country; the perfect environment to enable their continued milking of our coffers.

Mobitelea is now subject to yet another controversy, since the government wants again, to offload some more Safaricom shares to the public in an attempt to further hide disclosure facts.

History is repeating itself. This time around, it's a Kibaki privatization frenzy!

This time yet again, some patriotic and forthright Kenyans like Raila Odinga, are demanding full disclosure about ownership of Mobitelea and strict adherence to the provisions of the Privatization Act 2005, before any Safaricom IPO's are floated. Finance Minister Kimunya's own floatation rules are quite suspect, listing only 47% shares available for the public, with 50% shares going to the so-called high net investors - the likes expected to occupy Kibaki's re-election fete: the million-per-plate dinner. Kenyans are being taken for fools here.

Raila has threatened to file an injunction in court halting the offer, citing both procedural issues: failure to abide by the Privatization law and the failure to comply with the full-dislosure requirement of privatization.

On privatization, Kibaki has specifically succeeded in hoodwinking many unsuspecting Kenyans when he releases public reports citing "successful" privatization efforts and IPO floatations. This he did with the recent Ken-Gen and Mumias offers, where his government craftily pretended to offer 97% shares to the public. In essence, they had a huge pre-allocation for high net investors (friends of Kibaki coming in names like Trans-Century Investors and Baraka Afrika) who ended up acquiring huge stakes, 30% and 25% shares respectively from the two companies.

This my dear friends is what is called transferring (giving away) public wealth into the hands of a few politically-connected individuals. This largely contributes to the astronomically increasing gap between the rich and the poor in Kenya. It grossly undermines our economy in the long-run despite the short-term busy season it offers at the NSE. I'll quote Macharia Gaitho's January 24th, 2006, Sunday Nation editorial piece:

"One of the Ministers involved in the (Anglo-Leasing) cover-up is quoted as saying that 'President Kibaki is above money' and 'does not touch money'. The problem is, he depends on others to worry about how his political projects will be funded. And he asks no questions about the source of funds. Some of those fellows (he depends on) are now running some key state corporations, and are also linked to the investment groups that seem to have the inside track on a very opaque privatisation of public corporations."

Do the names TransCentury or Baraka ring a bell? These companies have questionably acquired, within four years under Kibaki's presidency, major stakes in all recently privatized parastatals, besides 20% stake in Rift Valley Railways, majority stakes in East African Cables, 2.13 million shares of Kenya Power (KPLC), 10% of Development Bank of Kenya and a sizeable chunk of the mortgage giant HFCK.

What about Kibaki's friend Moi and Mobitelea? What about Kibaki's friend Biwott whose Kobil company also recently secured a Sh. 3 billion oil supply deal to Ken-Gen?

Githongo's own insight has told us, in Kiraitu's words and admission, that the very Kenyan taxpayer was to be robbed in excess of Shs 5 Billion to fund Kibaki's 2007 re-election campaign. According to Githongo, more than 200 billion shillings has been lost under the facilitatory watch of these two wazees, Moi and Kibaki.

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