Firm snubs MPs’ summons in Sh6bn Telkom buyout probe
The owners of a firm that received Sh6 billion in the Telkom deal yesterday failed to appear before MPs, even as the lawmakers heard about an ultimatum to seal the transaction in the last days of President Uhuru Kenyatta’s government.
During the hearing, it was revealed that Telkom Kenya's majority owners had given the government an ultimatum to buy back the telco by July 31 last year, after which they threatened to sell their shares in the struggling company to other potential buyers.
Former National Treasury Ukur Yatani told the MPs that UK-based private equity firm Helios Investment Partners, which had a 60 per cent stake in Telkom, had from as early as August 2021 informed the Treasury of its decision to offload its stake in the company.
According to Mr Yatani, Helios wrote to the Treasury indicating its intention to exercise its put option in the agreement that led to its acquisition of a controlling stake in the financially troubled company.
In financial terms, a put option is a contractual right granted to a shareholder that allows them to demand that another shareholder buys out their shares.
The former CS noted that if the government had failed to buy back the telco, Helios would have proceeded with seeking potential buyers for its shares in Telkom at a time the top security organ had expressed concerns over the company potentially falling into the hands of private entities.
“Helios gave us the deadline for the put option of July 31 after which there would have been serious consequences for the government,” Mr Yatani told the joint committee. “We asked them for an extension and they gave us about two weeks to complete the transaction.”
Mr Yatani was appearing before the joint National Assembly’s Departmental Committee on Finance and Economic Planning and the Committee on Communication, Information and Innovation which is investigating the Telkom buyback deal.
MPs have been investigating the Telkom deal that saw the government purchase a 60 per cent stake in the company for Sh6.09 billion.
Lawmakers are intrigued by the apparent haste with which the deal was concluded, leading to emergency spending under Article 223 of the Constitution. The article allows the Treasury to use public funds without the approval of Parliament, but it must seek authorisation afterwards.
National security concerns
Mr Yatani said the National Security Advisory Council (NSAC) had authorised the government’s repurchase of Telkom Kenya, citing national security concerns.
The decision came several years after NSAC rejected a proposed merger between Telkom and Airtel Kenya, which top security officials believed would have posed a significant national security risk.
“This transaction (Telkom buyback) was not done for commercial purposes but for critical national security reasons,” said Mr Yatani.
Telkom provides essential communication services to various government entities, including the Office of the President, State Houses, the government data centre, the Ministry of Interior, the General Service Unit, and the ICT Authority. These services include government hotlines, the Government Common Core Network that supports the Integrated Financial Management Information System (IFMIS), and the Department of Defence’s restricted communication networks.
The directors of Jamhuri Holdings Limited (JHL), which is the parent company of Helios, failed to attend yesterday’s questioning session, prompting the committee to summon them for a second time.
Molo MP Kuria Kimani, who is the chairman of the Finance Committee, warned that if the JHL directors fail to attend the second summons, Parliament would issue an arrest warrant against them.