Corporate News
Mr Bill Lay, chairman of East African Portland Cement Company. EAPCC is
set to hire a consultant to carry out a forensic audit of its books on
claims of improper accounting at the firm that saw shareholders go
without dividend payment in the year to June 2013. PHOTO | FILE |
NATION MEDIA GROUP
By DAVID HERBLING
In Summary
The East African Portland Cement Company (EAPCC)
is set to hire a consultant to carry out a forensic audit of its books
on claims of improper accounting at the firm that saw shareholders go
without dividend payment in the year to June 2013.
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The Nairobi bourse listed cement maker which is majority
State-owned is considering engaging Deloitte & Touché —the new
auditors of the company for the year to June 2014— to examine EAPCC’s
previous financial records for any malpractices.
Ernst & Young were Portland Cement’s external auditors in the period to June last year.
The Treasury and the National Social Security Fund
(NSSF) — who jointly own 52 per cent of Portland Cement—raised the audit
queries at a stormy shareholders’ meeting held in December last year.
“The board is considering a number of issues.
Deloitte are the current auditors, but it is not determined yet who will
carry out the forensic audit,” said chairman of EAPCC Bill Lay in an
interview.
The allegations of accounting fraud at EAPCC turned
the spotlight on the National Audit Office and its appointed agent
Ernst & Young who reviewed the cement maker’s books.
The Auditor-General is responsible for the
statutory audit of parastatals’ books of account and has powers to
nominate private auditing firms to carry out the review on his behalf.
The protracted boardroom tussle at EAPCC has seen
shareholders miss out on a Sh0.75 dividend per share passed at last
year’s annual general meeting (AGM), after the Capital Markets Authority
(CMA) suspended the payout.
The capital markets regulator suspended all of
Portland’s AGM decisions including endorsing the company’s accounts,
dividends and election of directors.
This resulted in a standoff between the State and
French conglomerate Lafarge—which has 41.7 per cent stake at EAPCC — and
eventually spilled to the courts. The case is yet to be determined.
The State and NSSF alleged that EAPCC is ‘in the red’ and that the company’s management had cooked the statement of accounts.
The cement maker posted a net profit of Sh1.77
billion for the year to June 2013 compared to a loss of Sh972 million in
the same period a year earlier.
NSSF, which owns 27 per cent of Portland Cement;
Wednesday maintained that it was rooting for a forensic review of the
company’s books of account.
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