NSSF hides Sh9m loss in ARM Cement shares

NSSF headquarters. FILE PHOTO | NMG 

By OTIATO GUGUYU
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Summary

• Pensioners lost Sh9 million for the 2.9 million shares that the National Social Security Fund (NSSF) bought in Athi River Mining Cement after the company was placed in receivership and later sold.
• The NSSF has instead hidden the loss in its books, passing them off as worthless shares recorded at market value of Sh9 million.
• The ARM Cement was put under a 12-month receivership on August 17, 2018 over its inability to pay debts.

Pensioners lost Sh9 million for the 2.9 million shares that the ...
National Social Security Fund (NSSF) bought in Athi River Mining Cement after the company was placed in receivership and later sold.

The NSSF has instead hidden the loss in its books, passing them off as worthless shares recorded at market value of Sh9 million.

The ARM Cement was put under a 12-month receivership on August 17, 2018 over its inability to pay debts.

The company owes creditors Sh9.5 billion ($190 million) and has sold off Tanzanian subsidiary following the clearance by the court to sell ARM Kenya business to National Cement Company, disposing of the troubled cement maker for a cumulative Sh16.9 billion.

“Given that the ARM Cement had a debt of $190 million but sale of Kenya subsidiary yielded $50 million and Tanzania $116 million — and other assets like Rwanda are not significant — the sale price is insufficient to pay all the creditors and shareholders,” Mr George Weru, one of the administrators from PriceWaterhouseCoopers (PwC) said.

“These claims are subject to ongoing adjudication.”

Other shareholders who have lost their money in the company include British development aid company CDC, which bought a 42 percent stake in ARM in April 2016 for Sh14 billion when the company’s shares were trading at Sh37.

Its former owner, Pradeep Paunrana, has lost his family’s empire which at one time held a family stake valued at Sh10 billion. NSSF that has lost millions of shillings in bad bonds is yet to impair them even though recovery of the money is doubtful.

NSSF still holds Sh534 million Chase Bank and Sh132 million Imperial Bank bonds and has made a provisioning for them for the last two years.

MILLIONS LOST

“The bonds were invested between 28 September 2015 and 6 October 2015 and were to mature between February 2022 and September 2022,” the Auditor General said.

“The two banks were put under statutory management by CBK [Central Bank of Kenya] before maturity of the bonds. Consequently, it is not clear if and when the money invested in corporate bonds totalling Sh666.9 million will be recovered”.

The auditor also pointed out that NSSF is still holding onto fixed deposit of up to Sh329.5 million lost in Imperial Bank (Sh70 million) and Chase Bank (Sh259.5 million)