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Monday, March 12, 2012

MOBICOM MEN WIN CMC BATTLE: MUTHOKA KICKED OUT

Peter Muthoka and Bill Lay
For Peter Muthoka, high noon came at 11am, at the CMC Industrial Area premises boardroom. At last it appears, the threat by Paul Ndung'u, the chairman of Mobicom, that he would finish Muthoka had come to pass. By 12 noon Monday 12, 2012, Muthoka had finally been kicked out of the CMC board.

When it came down to it, the Andy Forwarders man found only John Kivai in his corner. His last remaining ally, Richard Kemoli, balked just before the board meeting was called to order.

In case you've not been following it, CMC has been involved in bitter boardroom wrangles that kicked off with a coup early last year that jettisoned CEO Martin Forsters (40-years at the helm) and long-serving chairman Jeremiah Kiereini carried out by newly muscled shareholders Peter Muthoka and his allies Paul Ndungu and Joel Kibe.

Months down the line, Muthoka was himself toppled in another boardroom coup and replaced by Joel Kibe, CEO of Mobicom.

Since then, allegations and counterallegations, boardroom and courtroom drama galore and sensational revelations of impropriety, kickbacks, corruption and secret offshore accounts have dominated CMCs coverage in the press.

Its share is suspended from trading on the NSE and authorities had ordered the constitution of a new interim board with an independent chairman.

On Monday, the board met to nominate the new interim board.

Word has it that Kemoli, who also chairs the Bamburi Cement board, was told in no uncertain terms outside the boardroom that his neck was also on the chopping block - he could either resign gracefully, or be thrown out in the bloodbath that was to follow. The votes were already marshalled, and the die was cast.

Significant is that in the grand scheme of things, Charles Njonjo (whose business interests typically revolved around the triumvirate of Njonjo, Jeremiah Kiereini and PK Jani) now chose to ally himself with the Mobicom men, Paul Ndung'u and Joel Kibe, as they made their final assault to take over the ailing auto-dealer.

Till then, Kiereini, and by extension Njonjo, were thought to be in Muthoka's corner. Ashok Shah, the supremo at APA Insurance (now Apollo Group), was seen as a wildcard and in the event that Muthoka had managed to call the extra-ordinary general meeting he had attempted to last year, Shah would have been the one to tip scales in Muthoka's favour.

Muthoka at that time wanted Billy Lay, current MD, Andy Hamilton, Paul Ndung'u and Joel Kibe voted out of the board and in their place three new members including one Mark ole Karbolo (currently embattled chairman of East Africa Portland Cement - Are all these guys embroiled in drama?) appointed.

That move was defeated through the courts and the Capital Markets Authority.

During a series of meetings held between CMC and CMA, on February 11 and 12, it was agreed that a new interim board of three Capital Markets Authority-appointed directors and seven CMC nominated directors would be constituted.

CMA appointed Susan Wakhungu of Human Performance Dynamics - she was involved in the restructuring of Safaricom into the current Safaricom 2.0, Zehranabu Janmohammed - of Archer and Wilcock Advocates and wife to TPS Serena boss Mahmud Janmohammed (she also sits on the Standard Group Board). Also appointed was Dr. Joshua Okumbe, CEO Centre for Corporate Governance.

THE COUP

When it came to the CMC side of the bargain, Muthoka miscalculated. First, he thought he would have Kemoli in his corner bringing his votes to three. Then in the agenda, he expected that the three CMA appointed directors would join in in the selection of the seven CMC side directors.

But Bill Lay and his side had other ideas. They decided to start with the nomination of the directors first meaning the current 10 directors of CMC would vote. Kemoli was first axed when he was appraised of the situation and hastily scribbled a note on a piece of paper to the board announcing his resignation.

Going into the meeting, a list that excluded Muthoka and his partner at Andy Forwarders, John Kivai, was proposed.

Ashok Shah of APA seconded it. The matter was put to vote and Muthoka and Kivai lost 7-2.

They stormed out with Muthoka threatening that it was not over yet and he would see them in court.

ANALYSIS

At the end of the day, if Muthoka knew what was good for him, he should have quit this battle a long time ago and walked away with the hundreds of millions he has made from CMC.

He however bet wrong. His trump card was that along with Johnstone Muthama, they are the main financiers of Kalonzo Musyoka's quest to become president.

But hoping to become president and being a sitting president are worlds apart.

You see, Muthoka was indirectly fighting a sitting president. 

Paul Ndungu and Joel Kibe, are business associates, some say frontmen, for Jimmy Kibaki and by extension the first family's business interests.

At every turn, Muthoka has pulled seemingly spine-bending blows to his adversaries, the tide has inevitably turned.


INVESTIGATIONS

With regard to three off-shore accounts, the CID and the UK Serious Fraud Office (SFO) are investigating. Likely to come under their cross hairs are the Jaguar and Nissan Diesel Brands which are said to have been paying kickbacks into these accounts.

JG Kiereini, the late PK Jani, and Charles Njonjo, former CEO Martin Forster and the late former company secretary of CMC will also be in the spotlight.

Muthoka's case will now be investigated by the CMA to ascertain his culpability in CMCs lost billions.






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