Parliament, regulator wade into Portland Cement raging dispute

The battle for supremacy at the East Africa Portland Cement Company took a new turn Wednesday with the market regulator saying it will take action against the firm’s directors as Parliament said it will summon the ministry officials.

On Tuesday, Portland Cement Company annual meeting ended in disarray after government officials, led by Industrialisation principal secretary Wilson Songa and the National Social Security Fund representative accused the board of directors of mishandling the AGM.

The meeting ended prematurely after Mr Bill Lay, the government’s preferred candidate to replace one of the retiring director, was rejected, triggering chaos.

Speaking to the Nation on the phone, Parliamentary Committee on Finance and Trade chairman, Mr Benjamin Langat, said the ministry officials were wrong in questioning the veracity of the financial statement at the AGM, side-stepping the board.

“We will summon the ministry officials in January once the recess is over,” Mr Langat, who is also Ainamoi MP, said. “We believe there should be a better way to handle this than conducting a shouting match in public.”

On his part, Capital Markets Authority chairman Kungu Gatabaki said the authority would be writing to the Portland chairman, Mr Mark ole Karbolo, demanding an explanation on why he ignored calls to conduct the meeting as requested by some of the shareholders.

THE LAW IS CLEAR

“We will want to know why the chairman decided to ignore the calls for a vote because maybe he would be having reasons which he didn’t indicate, but legally the law is clear on what the holder of such a position would do,” Mr Gatabaki said.

The Company Act stipulates that at any AGM, a resolution put to the vote shall be decided on a show of hands unless a poll is demanded in writing by at least three shareholders.

The government and NSSF, who together control 52 per cent of the firm, objected to all resolutions and demanded for a poll on them.

“Mr Karbolo unilaterally rejected the call for the poll and decided to proceed with each agenda item without stating whether the resolutions were passed or not,” Industrialisation PS Wilson Songa said.

On the accusation of fabricating the financial statement, Portland chief executive officer Kephar Tande said the company was on the right track, adding that they would be given a clean bill of health.

SHARE PRICE UNCHANGED

“We are ready for an audit even by the best auditors from any part of this world,” he said during the meeting.

The Industrialisation ministry and NSSF have maintained that the firm is “in the red” to the tune of Sh500 million, with actual operating profits being Sh340 million and not the Sh1.77 billion that was recorded by the firm to June 2013.

“The government will do anything to ensure that the truth on the financial position of the firm is brought to the fore,” Mr Songa noted.

The ministry also wants CMA to investigate the conduct of Mr ole Karbolo and board members, including Titus Naikuni (Kenya Airways MD), Hamish Keith, chief executive Kephar Tande and company secretary JLG Maonga.

Portland Cement share price remained unchanged at Sh78 at the Nairobi Securities Exchange on Wednesday.