This action might not be possible to undo. Are you sure you want to continue?
Official valuation, $200m. Real Worth, Up to $8bn
Opening statement by Hon Raila Odinga at press conference on sale of Telkom Despite the intense pressures on our time at this stage of the campaign, and with the presentation of the nomination papers barely an hour away, the Pentagon has nevertheless hastily gathered here because we are alarmed about the latest government plot to unlawfully siphon off yet again billions of shillings of Kenyans hard-earned money into the pockets of a few well-connected individuals. 420 billion shillings will change hands in an exercise that is to last only three weeks. The brazenness of this plot is particularly breathtaking because there is seemingly no concern that the exposure of this crime could lead even more Kenyans to vote against the PNU. One can only conclude that the PNU leadership is aware that the election cannot be won and has thrown all caution to the wind in order to have final feast for its cronies even as hunger, joblessness and deprivation are the lot of the vast majority of our fellow Kenyans. This crime is particularly reprehensible because it involves a theft of unprecedented proportions, which makes Anglo Leasing look small by comparison. I appeal to the media to highlight this massive theft so that Kenyans will demand that the sale of one of the country’s largest and most valuable companies is conducted under the terms and protections laid out in the Privatization Act. I will now ask Hon. William Ruto to read out the text of the formal ODM statement.
FINANCIAL BIDS WILL BE OPENED, EVALUATED IDENTIFIED IN ONE DAY, on 16 November, 2007
Statement read out by Hon William Ruto
The government is about to undertake the privatization of another major parastatal as part of its ongoing scheme to defraud Kenyans of tens of millions of dollars through the sale of publicly-owned companies. The parastatal now being privatized is Telkom Kenya, and the loss this time will come to a massive KShs 420 billion. This new sale is designed to circumvent the delay imposed on the privatization of Safaricom by an ODM-initiated court case. The new strategy to reap billions focuses on selling for a song the giant mobile phone company’s parent company, Telkom, which owns 60 percent of Safaricom stock. The sale will be carried out in the startlinglyaccelerated period of three weeks and conducted through underhand deals. This is nothing less than another Anglo-Leasing scam in the making. Why is the government in such an extreme hurry to sell Telkom before the election? The opening of the bids was conducted on Monday, November 12, 2007; evaluation of technical proposals is on-going and is scheduled to be completed tomorrow, November 15. That will pave the way for opening the financial bids, evaluating them and then
identifying the successful bidder on 16th November, 2007. Finalization of contract documentation and signature is scheduled to be by 13th December 2007 and closing and transfer of shares by 21st December 2007. According to this schedule, the successful bidder assumes board seats and management role of in Telkom on 21st December 2007. Indeed, in one single day, technically qualified bidders will be announced, financial proposals will be opened and evaluated, notice given to the successful bidder, and the deal closed between the bidder and the government. Given this scenario, it is obvious that the so-called ‘strategic equity partners’ are part and parcel of abetting this impending mega corrupt deal and their identities are already known. They include state house operatives and local sleepers within the government-registered off-shore companies in the manner of the mysterious Mobitelea - the original 10 percent shareholders in Safaricom. This circumventing of due process is designed also to hide both the identity of the local owners of Mobitelea and the reason for their having been given ownership of 5 percent of Safaricom shares. Why can’t the government wait for the court ruling before selling Telkom? What is the role of the Communications Commission of Kenya, (CCK) when licensing rules and procedures are being flouted with impunity? A look at the financial figures gives an indication of the scale of the theft that is being perpetrated. Telkom Kenya is valued at US$200 million (Ksh14 billion). With a subscriber base of over 8 million, Safaricom is worth over US$8 billion (Ksh560 billion). Since Telkom owns 60% shareholding in Safaricom, Telkom’s share value is therefore roughly US$4.8 billion (Ksh336 billion). Add to this to the value of its recently acquired mobile service license, and the swindle‘s monstrous scope becomes evident. Why, in fact, was Telkom offered this new mobile service license when its privatization had had already been determined. Telkom’s Safaricom share has since been transferred to Government without any indication of Telkom Kenya benefiting. This casts doubt on the Telkom Kenya’s ability to service its pension deficit and the syndicated loan. We are witnessing not only a systematic theft of public resources organised by the government but a looming pension crisis for thousands of employees as well. We are aware that the shareholders agreement and the share purchase agreements were grossly manipulated in favour of certain bidders who fell short of meeting the technical requirements as spelt out in the original RFP. The Minister for Finance, the President’s family, the finance PS and the Investment Secretary and the transaction advisors must be pressed to disclose their interest. Separately, Telkom’s debt is estimated at US$1 billion (Kshs 60 billion), according to available information. The government wants to transfer this debt to the Treasury. That means that after selling Telkom to themselves for only US$200 million, the government wants the poor Kenyan to pay one billion dollar debt. This is yet another unconscionable action by the government to punish its people in order to enrich itself.
The sale also intends to obstruct justice. The PIC report says that Telkom actually owned 70% shares in Safaricom in January 1999 and that 10% of its shares were fraudulently given out to Mobitelea. At the current worth of Safaricom these shares are worth Ksh50 billion. The sale of Telkom without recovering this money is meant to obscure and protect the owners of Mobitelea and the recovery of this money. There is no need for the government to create another parastatal to manage the optical fibre cables planned countrywide to extend ICT countrywide after selling off 51% of Telkom Kenya. For sometime now, ODM has been alerting Kenyans that the rush by this government to conclude certain lucrative procurement deals is neither transparent nor accountable, since it will cost the taxpayer loses in billions of shillings. All the rush is being done to secure kickbacks for purpose of oiling the re-elections. We also have credible evidence that all government procurement for the financial year 2007-08 has been brought forward to be finalized by the end of November. This will enrich insiders within the outgoing government even as it leaves empty coffers for the incoming government. The conclusion is that Telkom is being sold to fraudsters at US$200 million. They will then resell it at its actual value of about US$6 billion. For those who have been incorporated in bidding as Strategic Equity Partners, ODM wishes to tell them that they are unwittingly being used to camouflage the theft of taxpayers’ money. They will be held accountable by Kenyans in the future.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.