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Back from the brink, but MTN woes linger on

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By MICHAEL WAKABI
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The dispute between African telecommunications giant MTN and Ugandan authorities may be far from over, but decade-old intention to open up the company to wider Ugandan participation provided President Yoweri Museveni and MTN to Group chief executive Rob Shuter straws to cling on it, as they pulled back from the brink of a potentially damaging standoff over the company’s future in Uganda.

In a statement datelined Davos, Switzerland, where President Museveni held talks with the MTN boss on January 23, State House Kampala announced that a months old dispute over the renewal of MTN’s licence had been resolved, and that the telco had also agreed to spread its ownership to more Ugandans through a share placement with the National Social Security Fund.

“It is important that you float shares on the local stock exchange to allow for local ownership now that the licence has been renewed,” President Museveni is reported to have said during his meeting with Mr Shuter, signalling an end to the standoff.

Analysts are seeing the climbdown as a compromise that serves Uganda’s economic and diplomatic interests.

In 2017, the ICT sector contributed 9.8 per cent to Uganda’s GDP and MTN accounted for 63 per cent of that value. Rash actions against the company were likely to have a ripple effect on investor perception while the grave charges levelled against foreign employees — some of whom were controversially deported earlier in the week — were causing unnecessary diplomatic friction.

The Davos compromise came at the height of tensions that had started early in the week when the Internal Security Organisation (ISO), in quick succession, rounded up and deported three top executives of the telecoms firm from Uganda between January 19 and 22.

They are French national and MTN Uganda chief marketing officer Olivier Prentout, Franco-Italian citizen and general manager for mobile financial services Elsa Muzzolini and Rwandan Annie Bilenge Tabura, who was head of sales and distribution.

The actions strained further already frayed relations with Rwanda, which cited Ms Tabura’s removal as further evidence of a witch-hunt against its citizens by Kampala, while France is also understood to have protested and demanded evidence to justify the treatment its citizens had been subjected to.

For the investor community, the actions against MTN and a new policy banning licence renewal for wholly foreign-owned sports betting firms, pointed to threats of policy reversal and forced nationalisation last witnessed in Uganda’s famous “Move to the Left” 50 years ago.

MTN International controls 95 percent of the stock in MTN Uganda. Ugandan businessman Charles Mbiire holds the solitary Ugandan stake of five per cent in the company.

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That skewed ownership has been interpreted by many commentators to mean that 95 percent of profit is repatriated from the economy. But, in presentations to the Uganda Revenue Authority, MTN has in the past argued that only 12 per cent of its net revenue is paid to shareholders, 32 per cent is retained in Uganda as taxes and government fees, while 18 per cent is ploughed back into the network.

It is this concentrated external ownership structure that has made the company vulnerable and has fed into current concerns over its potential impact on the stability of the Ugandan economy.

While the share offer to NSSF is being touted as a new proposal, The EastAfrican has learnt that it has been the subject of ongoing discussions between the company and the Uganda Capital Markets Authority for close to 10 years now.

MTN has been averse to open listing on the Uganda Securities Exchange, arguing that it could become exposed to dirty money.

The company first expressed its intent to sell a stake to the NSSF in 2008, but then the Fund got embroiled in a governance scandal that made the telco view it as constituting a reputational risk.

NSSF managing director Richard Byarugaba declined to discuss any potential deal with MTN, but independent analysts say that although a stake in the company would hypothetically spread Uganda’s participation in the company to the 2.5 million members of the Fund’s register, in real terms it would not amount to more than an eight per cent stake, because of restrictions on NSSF’s asset classes.

Currently, the fund is allowed to invest up to 25 percent of its Ush10 trillion ($2.7 billion) assets in equities. Current exposure to equities stands at 16 percent, leaving a margin of 9 percent or Ush900 billion ($243 million) available for further investments in that class. At MTN Uganda’s current valuation of Ush7.2 trillion ($1.9 billion), that money can only buy eight percent if NSSF chooses to take on that exposure.

It was not immediately clear if such a stake would placate President Museveni who, in the remarks made at Davos, accused players in the telecommunications sector of cheating on taxes through under-declaration of earnings. He has also alluded to the impact of repatriation of profit by foreign firms on exchange-rate stability.

Besides, it is at odds with a new ICT sector policy — yet to become law — under which players in the telecommunications sector will be required to list 30 per cent of their stock on the local exchange.

President Museveni had protested what he saw as an unwarranted discount when the Uganda Communications Commission allowed itself to be bargained down from $100 million to $58 million for MTN’s 10-year licence extension.

President Museveni’s view, communicated in a letter to UCC, was that MTN should pay more for the licence since it was repatriating 95 percent of its profits from the country. That letter created a stalemate that saw the deadline for a new license for the telco to lapse on January 20.

Following the Davos compromises, the UCC was on Friday expected to announce a three-month interim licence for MTN.

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Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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