Companies

Chris Kirubi steps out as Kenya’s top corporate fixer

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Chris Kirubi during the interview at his International Life House office on September 2, 2014. PHOTO | DIANA NGILA

Summary

  • Inside story of billionaire businessman who has built clout under the Uhuru government.

In the hallowed boardrooms of Kenya’s top corporations and in the corridors of political power and influence, the one name that has popped up more than any other in the past year, especially when the subject is a multi-billion-shilling public or private sector deal, is Chris Kirubi.

The billionaire entrepreneur appears to have rediscovered his deal-making ways to become Kenya’s most powerful corporate personality in President Uhuru Kenyatta’s government.

Two things have happened in the past 15 months to signal Mr Kirubi’s rising influence. He has been part of every foreign trip Mr Kenyatta has made in pursuit of business and investment, including to South Africa, China, and the United States.

And Centum, the investment firm where he is a director, has become bolder in crafting and pursuing multi-billion-shilling deals.

Mr Kirubi is arguably the power behind Centum’s recent show of large appetite for big-ticket transactions that have straddled both the public and private sectors to the utter amazement of friends and foes.

SEE ALSO: Who is the real driving force behind Centum?

In the past 12 months alone, Centum’s pipeline of deals has produced the Sh30 billion Two Rivers real estate project in Nairobi and a Sh4.5 billion bid to buy out listed agricultural firm Rea Vipingo where it is embroiled in a supremacy war with two British brothers.

Last month, Centum announced that it had taken a 67.5 per cent stake in K-REP Bank after buying out foreign investors who were leaving.

Mr Kirubi has, however, reserved most of his deal-making fire power for the multi-billion-shilling government contracts that Centum has been pursuing, including the Sh174 billion coal power tender whose award on Monday saw him cross swords with Nairobi lawyers Ahmednasir Abdullahi and Fred Ngatia.

The billionaire businessman was also the power behind Chinese firm Haier’s teaming up with Centum to pursue the Sh24 billion tender to supply the government with laptops for primary schools.

READ: Kirubi, Ahmednasir in dog fight for coal power tender

Though many people would argue that Mr Kirubi has always been rich and influential, it cannot be denied that his stature as a deal maker has risen significantly under the Uhuru government. 

Mr Kirubi told the Business Daily in an interview that Centum is working on several other multi-billion-shilling deals he could not disclose because of restrictions imposed by the capital markets regulations.

More recently, Mr Kirubi’s aggressive pursuit of government contracts has been seen as leveraging on his newfound influence in political circles to gain an edge over rivals.

In his 13th floor office at International Life House Nairobi, Mr Kirubi has a photo of Deputy President William Ruto and himself as the computer screen saver – probably a statement of how high and wide his influence goes.

But the businessman denies any suggestion that he has become one of the blue-eyed boys of the Jubilee government — insisting that any influence he has at present has been built over a long time and is based on merit.

“I have not had the priviledge of having a cup of tea with Mr Kenyatta in private since he became President,” he says. “I only accompany him on foreign trips because I am a business leader. I mean you cannot talk about business in Kenya without talking about Kirubi.”

When it comes to the battle for public tenders, Mr Kirubi is as bold as it could ever get. The billionaire businessman who is best known for his flamboyance and straight talk says he has no problem with the government favouring Centum or any other local firm.

Mr Kirubi says he has embarked on a one-man crusade to change Kenya’s economic management and have the government enact laws that guarantee the participation of local firms in public tenders is at the core of that vision.

“We need to introduce a policy that is similar to South Africa’s Black Economic Empowerment (BEE) drive,” he says, adding that the current situation is simply outrageous.

Mr Kirubi sees such affirmative action as accomplishing several goals, including building local capacity and offering local investors a chance to benefit from the multi-billion-shilling projects.

He predictably uses the example of Centum to elaborate the potential benefits of his vision.

“Any Kenyan can buy into Centum where the government itself is a major shareholder,” he says before posing to ask how any ordinary Kenyan could benefit from awarding entire contracts to foreign companies.

In the meantime, Mr Kirubi has chosen to flex his political muscle and business acumen in pursuit of these outcomes for the publicly traded investment firm where he owns a 25 per cent stake.

Only a few days ago, Mr Kirubi found himself on the firing line when the Ministry of Energy was about to announce the award of a lucrative coal plant tender to the Centum/Gulf Energy consortium, leading to a fiery exchange of words with representatives of the losing bidders Shanghai Electric Power Company and HCIG Energy.

Mr Kirubi sees the coal plant tender fallout as a microcosm of what is wrong with Kenya’s policy as far as State jobs go.

“We won on merit and did not even take credit for being a local company. And now Kenyan lawyers have been hired to fight us,” he says, adding that he is appalled by what he calls the obstruction or lack of support for his empowerment idea among fellow citizens, including the Kenyan lawyers representing the losers.

At the centre of the dispute is the use of varying coal standards to measure the efficiency of the plant and hence the cost to the producer of power it will generate.

Mr Ngatia claimed that awarding the contract to the Centum consortium would cost taxpayers an extra Sh19 billion.

Mr Kirubi says he is displeased with people who have managed to grow rich at the expense of their country by pocketing millions of shillings as agents of foreign firms.

“We have bid for other big projects and lost. We have accepted that someone did a better job and left it at that,” Mr Kirubi says.

The businessman notes that government tenders have in the past been almost entirely the preserve of foreign companies using their bigger financial muscle and technical knowhow.

But he says that Kenya has strong companies that can be worthy partners of foreign multinationals to undertake local works and that it is now time to change. 

Local firms, Mr Kirubi admits, often charge more for public jobs but attributes that to a number of factors, including the relatively smaller economies of scale. This, he says, is the price the country must be ready to pay to build capacity that will come in handy in the future while enriching Kenyans in the process.

Mr Kirubi says part of the influence he now commands may come from the sheer economic clout he has but admits that he benefited from political patronage in his formative years.

In 1984, for instance, Mr Kirubi approached the President Moi for help as he planned to buy International House from Cannon UK.

“Those were the days of foreign exchange controls. The building was to be paid for in foreign currency and the former president helped me get the necessary clearance,” he said, even as he confirmed that the assistance culminated to Mr Moi acquiring a stake in International House, which he retains to date.

Mr Kirubi paid Mr Moi in kind too. In the run-up to the 1997 General Election, he was a member of the Central Province Development Support Group led by media tycoon Samuel Kamau Macharia, which campaigned for the re-election of Kanu.

The team consisted of Kikuyu businessmen and heads of parastatals. Mr Kirubi was at the Sh1 million-a-plate dinner that raised money for Kanu.

The businessman says he is grateful to the former President for protecting him from unnamed powerful detractors he refers to as the “Mafiosi”.

Those who know Mr Kirubi say the statement lends some credence to the suggestion that he had somewhat frosty relations with former President Mwai Kibaki arising from a business deal gone sour.

Some Kenyans still remember that the businessman knelt before Mr Kibaki in Parliament gardens moments after the then newly elected President delivered his inaugural speech during the opening of the august House on February 18, 2003. Mr Kirubi curtly denies having any problems with Mr Kibaki but offers a hint as to what may have been at stake.

“I have no problem with Mr Kibaki. It is just that some members of his family wanted more than they were entitled to,” he says.

Asked how Centum plans to finance its growing multi-billion-shilling acquisitions and projects binge, Mr Kirubi says the company is increasingly relying on joint ventures with deep-pocketed global investors.

Centum’s job is to originate bankable projects and scale them up before scouting for equity partners, he says, giving the example of  the Two Rivers complex where foreign investors have pumped in hundreds of millions of dollars.

Despite his larger-than-life profile on Kenya’s business scene, the businessman still has to fight allegations that his wealth is linked to the plunder of State firms such as Kenya National Transport Company (Kenatco) and Uchumi Supermarkets where he served in senior positions.

“We know for sure that Mr Kirubi, who has been bragging around that he is extremely rich, was responsible for the collapse of Kenatco but nothing happened to him. He was subsequently given Uchumi to manage, which has now suffered the same fate as Kenatco,” David Musila, then Mwingi South MP, said in a parliamentary debate on June 13, 2006, according to a Hansard report.

Mr Kirubi was part of a management team picked by the government to run Kenatco in 1993 as it recovered from bankruptcy seven years earlier.

The new team managed Kenatco for three years during which its performance deteriorated drastically, leading to its placement under receivership in 1996.

Mr Kirubi says he was personally pained by the company’s woes, adding he was also frustrated and left the transport firm due to “those other people who were stealing from us.”

Mr Kirubi’s stint as chairman of Uchumi also sparked controversy when the retail chain went belly up in 2006 in what was linked to alleged mismanagement and fraud.

The businessman and other directors were taken to court over several deals, including sale of Uchumi’s Aga Khan Walk branch for Sh147 million and the leasing back of the landmark building to the retail chain for Sh1.7 million per month in 2004.

They were, however, acquitted in May 2011 and Mr Kirubi says this was a clear confirmation of his innocence.

“The Uchumi case was fabricated. It was weak but because it was instigated by powerful people in the Kibaki government, it was somehow allowed to continue,” he says.

Dismissing the corruption allegations, the businessman says he originally made money from flipping real estate.

Mr Kirubi says Kenyan businesses and entrepreneurs should be supported, adding that the country will only prosper if it creates a critical mass of homegrown multinationals.

On his flashy lifestyle, the businessman rejects the idea that he is extravagant, saying he only lives according to his means which allows him to splash out even Sh1 million on a suit.

He is, however, slightly uncomfortable with his elevated status.

“We rich people need to be very humble because the gap between us and the poor is huge,” he says jokingly, speculating that our photographer’s net worth may be equal to the value of two T-shirts.

Asked about his own net worth, he says he has never sat down to calculate it, adding that such an exercise would make him look like an idle and complacent rich man.

He, however, goes ahead to inform us that those who attempt to gauge his wealth by his shareholding in public companies — at more than Sh10 billion — are just scratching the surface.