From left, founders of Wananchi Group Richard Bell, ICT secretary Joe
Mucheru and Njeri Rionge. Bell has moved to court seeking to stop his
business partners from suing him. FILE PHOTOS | NMG
Summary
- Richard Bell says the planned civil and criminal proceedings against him are part of a scheme by a section of shareholders who want him to buy their shares at inflated prices.
- The suit has also revealed the Internet and pay TV service provider’s intricate ownership structure that is made up of several layers of companies.
Owners of Internet and pay TV service
provider Zuku have been thrust into a vicious boardroom war sparked by
plans to sell off Wananchi Business Services — the unit that deals in
corporate data services.
The company’s founder, Richard
Bell, has moved to court seeking to stop his partners — Wananchi
Nominees Limited, ISP Kenya Limited and East Coast Telecoms Limited —
from instituting any civil or criminal proceedings against him or East
Africa Capital Partners Management LP (a company he owns) for alleged
mismanagement, asset stripping and tax fraud schemes.
ICT secretary Joe Mucheru and former CEO Njeri Rionge are the other well-known founders of Wananchi Group.
Mr
Bell, through East Africa Capital Management, says the planned civil
and criminal proceedings are part of a scheme by a section of
shareholders who want him to buy their shares at inflated prices.
“As
the performance of their shares in the ATMTF1 [Africa Technology &
Telecommunications Fund 1] failed to meet their expectations, the
defendants despite receiving valuation reports as stipulated in the
shareholder and management agreements have engaged in a concerted scheme
of extortion, threatening dire consequences unless they were bought out
at their preferred price,” Mr Bell says in court filings.
Mr
Bell says that the planned proceedings are aimed at frustrating the
sale of Wananchi Business Services by dragging the firm’s name through
the mud to discourage potential investors.
Complex ownership structure
The
suit has also revealed the Internet and pay TV service provider’s
intricate ownership structure that is made up of several layers of
companies.
At the top of pile of companies that own Wananchi Group Holdings Limited is ATMTF1 with 69 per cent.
Mr
Bell’s East Africa Capital Partners Management, Wananchi Nominees
Limited, ISP Kenya Limited and East Coast Telecoms Limited own ATMTF1.
Mr
Bell adds that the rival group of shareholders has already sent
damaging letters to the taxman and the competition watchdog making
“baseless” allegations.
“The letters, which have been
sent on behalf of the defendants and copied to various authorities,
including the Capital Markets Authority (CMA), and the Competition
Authority of Kenya (CAK), have already and are causing substantial harm
to the reputation of East Africa Capital Partners Management LP, ATMTF1
and Wananchi Group Holdings Limited,” he adds.
Wananchi
Group Holdings Limited had in a 2015 board meeting resolved to sell off
Wananchi Business Services, which owns licensed public data operator
Simbanet, satellite teleport service provider iSAT and tier one carrier
Wananchi Telecom.
The planned sale of Wananchi Business
Services was intended to pump more capital into better performing units
in the group, and to cater for projected cash shortfalls in future.
East
Coast Telecommunications Limited, one of the defendants in the fresh
suit, had in 2014 filed a suit against Mr Bell’s East Africa Capital
Partners, Wananchi Group Holdings Limited and ATMT Holdings seeking a
forensic audit of the Internet and pay TV’s books of accounts.
East
Coast Telecommunications claimed that Mr Bell’s firm has been engaging
in fraudulent product tendering practices, fraudulent transfer pricing
of content and equipment and false accounting all aimed at benefiting a
select group of shareholders.
The firm also faulted
staff recruitment processes while claiming that the taxman risks losing
out on due revenue from Wananchi Group. The KRA last year launched a bid
to recover Sh3.4 billion from Wananchi Group, which has since been
contested in court by the Internet and pay TV service provider.
Mr
Bell now says the issues East Coast Telecommunications, Wananchi
Nominees and ISP Kenya have raised are to be resolved through
arbitration as per the shareholders agreement existing between them.
He
adds that East Africa Capital Partners Management LP and ATMTF1 have
issued a notice of arbitration, but that the rival shareholders’ camp
has continued to threaten civil and criminal proceedings in Kenya.
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