EACC calls for suspension of Telkom merger

By Mercy Mwai On Wed, 14 Aug, 2019 13:30 | 2 mins read
Telkom
Telkom Kenya CEO Mugo Kibati claims Safaricom is out to scuttle their planned merger with Airtel. PHOTO | FILE
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    EACC could stop the proposed merger of Telkom Kenya and Airtel Network Kenya after it revealed it has opened fresh probe into how the deal was brokered.

The Ethics and Anti Corruption Commission (EACC) could stop the proposed merger of Telkom Kenya and Airtel Network Kenya after it revealed it has opened fresh investigations into how the deal was brokered.

Appearing on Tuesday before the Parliamentary Committee on Implementation, chaired by Narok North Member of Parliament Moitalel Ole Kenta, EACC director of investigations Abdi Mohamud said the commission would not want to make a decision on the matter before all the legal issues surrounding the merger have been addressed.

“We will constitute a legal team to see whether EACC can temporarily halt further transactions on the deal to safeguard public interest,” he said.

The commission told MPs that it will be summoning top officials from Treasury and the Information ministry as well as any other individuals who sanctioned the deal.

Abdi said anybody mentioned in the matter will be treated as either a witness or a suspect and will be required to record a statement.

 “We expect to conclude the preliminary investigations within the next one month,” said Abdi.

His sentiments came after MPs accused the commission of trying to protect powerful individuals who they claimed sanctioned the deal.

High ranking officials who have served at the two ministries during that period include former Cabinet Secretary Henry Rotich and Principal Secretary Kamau Thugge from Treasury while Fred Matiang’i and Joseph Tiampati served as CS and PS respectively before the recent Cabinet reshuffle.

Restructuring exercise

The deal, which first emerged in December 2007, followed a restructuring exercise which saw France Telecom (now Orange SA) buy a 51 per cent stake in Telkom Kenya at Sh26 billion.

The National Assembly Public Investment Committee, however, dismissed the deal in 2014 saying it was similar to share-fixing since the government would get only Sh2.5 billion of the required Sh4.9 billion.

MPs Simba Arati (Dagorreti North), Godfrey Osotsi (Nominated), James Murgor (Keiyo North), Michael Kingi (Magarini) and Joshua Mwalyo (Masinga) demanded that the merger be stopped until investigations into the deal have been concluded.

Kenta sought to know whether the commission has been protecting certain powerful individuals in government and that is why as of today the investigations into the deal have not been concluded.

Mwalyo said the only solution is to have the deal stopped to prevent loss of public funds especially now that Parliament has questioned the entire deal.

Last month, the committee wrote to the Communications Authority of Kenya (CA), requesting it to stop the merger until all issues currently under investigations are concluded. This was after CA director general Francis Wangusi gazetted the government’s intention to have the two telcos merge on July 12.

Intergrated firm

After the merger, Telkom would gain shareholding in Airtel so as to create an integrated telecommunications company with mobile, enterprise and wholesale divisions.

The parties have indicated that upon the approval of the proposed merger, Airtel will be renamed Airtel- Telkom, while Telkom will continue operating in the ICT sector providing other services to select customers.

Following the move, the two telecommunication companies went ahead and signed an agreement to merge their businesses and operate as Airtel-Telkom.

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