Portland takes CMA to court in Treasury, Lafarge board row

The East Africa Portland Cement Company factory entrance at Athi River. FILE 

By Galgalo Fayo, gfayo@ke.nationmedia.com

In Summary

• The company argues that the CMA lacks the mandate to suspend the resolutions since AGMs are overseen by the Registrar of Companies.
• CMA suspended the resolutions by shareholders two weeks ago following a protest from the government, which is the majority shareholder.

East African Portland Cement Company (EAPCC) has gone to court, seeking to lift the suspension of its annual general meeting resolutions by the Capital Markets Authority (CMA).

The company argues that the CMA lacks the mandate to suspend the resolutions since AGMs are overseen by the Registrar of Companies.

“The CMA be restrained from interfering in any way whatsoever with regard to the implementation of the resolutions passed at the 81st AGM, pending hearing and determination of this application,” reads one of the orders sought by EAPCC company secretary John Maonga.

CMA suspended the resolutions by shareholders two weeks ago following a protest from the government, which is the majority shareholder.

The government argued that its clout did not count after EAPCC chairman Mark ole Karbolo adopted a show of hands, instead of number of shares held, to approve the day’s business.

“He (Karbolo) was clearly in a hurry to carry out the assignment of forcing through the items on the agenda in total disregard of the government’s entitlement to a poll as a majority shareholder,” said Industrialisation principal secretary Wilson Songa, who represents the government on the board.

Among the sticking points was the appointment of Didier Tresarrieu to represent Lafarge, the third largest principal shareholder, against the wishes of the government which wanted former CMC chief executive officer Bill Lay in the board.

EAPCC has listed CMA, the attorney- general, National Social Security Fund (NSSF) and its trustee, and Nairobi Securities Exchange (NSE) as respondents.

In the papers filed in court, the government accuses French conglomerate Larfarge of compromising some of the State appointees in a bid to control the board through the backdoor.

The Treasury and NSSF jointly own 52 per cent while Lafarge owns 42 per cent, leaving six per cent in the hands of minority shareholders. Mr Maonga said the suspension and ongoing investigation by CMA could lead to its suspension from NSE and paralyse its operations.

On Monday, High Court Judge George Odunga ordered that the status quo be maintained and directed the parties to respond by January 15 when the case will be heard.

CMA launched investigations into claims of creative accounting and breach of corporate governance rules during the EAPCC’s AGM on December 17 following protests from the Treasury and the NSSF.

READ: CMA moves to probe Portland after chaotic AGM

The government also sought nullification of Mr Tresarrieu’s election as a director and repeat of the poll.

In response to the suit, Dr Songa accuses Larfarge of seeking to control the cement firm to benefit Bamburi Cement, EAPCC’s rival. Dr Songa is also the Treasury’s representative in the firm’s board.