Jamhuri Holdings sold its Sh6.09 billion stake in Telkom Kenya after realising that it had made a bad investment decision, MPs heard on Wednesday.
Lawyer Karim Anjarwalla told a joint sitting of the Departmental Committee on Finance and National Planning and the Departmental Committee on Communication Information and Innovation the firm exited Telkom Kenya because “it was not a great investment.”
“The important thing to do was to let the government take over and hopefully turn around the entity,” Anjarwalla said when he was asked why Jamhuri Holdings was keen to sell its stake in the firm.
“I am saying it plainly. I do not know if it has been said like this before,” he said.
Departmental Committee on Finance and National Planning chair Francis Kimani said the bad performance by Telkom Kenya has not been accidental.
“When other telecommunications companies are making huge profits, Telkom Kenya has been performing very poorly. We must get to the bottom of this and people who will be found culpable must pay the price,” he said.
The government paid Sh6.09 billion to acquire a 60 per cent stake in Telkom Kenya from a UK-based private equity fund, just four days before last year’s general election.
The Treasury withdrew Sh6.09 billion on August 5, 2022, and paid Jamhuri Holdings Limited, a Mauritius-based subsidiary of Helios in a transaction that lacked parliamentary approval.
On February 14, 2023, Controller of Budget Margaret Nyakangó had earlier told legislators the National Treasury overruled her in the transaction.
The CoB must approve the withdrawal of cash from the government’s main accounts and has powers to block access to funds suspected to breach the law.
Nyakan’go said he refused to authorise the withdrawal of the billions to buy out Helios Investment Partners in Telkom Kenya in a deal that made the company fully state-owned.
But on Wednesday, Anjarwalla told MPs he did not see anything sinister with the timing of the buyback.
“It was in July 2021 when Jamhuri Holdings realized it could not grow in Telkom Kenya and a decision was made to exit,” he stated.
He said an agreement with the government was reached in May 2022.
“In July 2022, we completed the agreement but the buyback was extended to August,” he explained.
“The buyback was in the works for a long time,” he stated.
On April 5, 2023, former National Treasury PS Julius Muia told MPs the deal was lawful.
“The National Treasury complied with all requirements. The payment was lawful and it was in the interest of the Kenyan people,” he said.
The former PS said he received a letter from the Executive Office of the President on April 8, 2022, saying the National Security Advisory Council had okayed the exiting of Helios and the government was to take over the firm.
He noted that the National Treasury then granted approval of the deal and okayed payments on July 28, 2022.
“Approval was used by the National Treasury to request the ex-chequer for payment and also request the Controller of Budget to approve the withdrawal,” he said.
He claimed the CoB granted approval on August 3, 2022.