The National Treasury paid Ksh6.1 billion for a 60% stake in Telkom Kenya without seeking approval from Parliament, which has resulted in controversies. The government assumed whole ownership of the company. The acquisition of the loss-making company has caused a parliamentary investigation, with John Ngumi, the investment banker who brokered the deal, being paid Ksh415 million in compensation for his expertise.
National Assembly Finance Committee Chair, Kuria Kimani, wondered what kind of skill he brought with lawyers that would make him ksh415 million in five months.
Ngumi revealed that he was paid because he was the best in the business and he had previously helped a UK firm save money and make better decisions. He confirmed that he was appointed on April 1, 2022, as a private advisor, though he had been previously contracted by Helios in 2016.
Ngumi was summoned after it was disclosed that he played a key role in the deal that saw Helios exit from Telkom Kenya.
Read: John Ngumi Receives Ksh 585 million in Telkom Deal
Helios was exiting Telkom Kenya after six years, having acquired its stake from Orange of France in 2016. The company had acquired the 70% stake that Orange held in the telco but it was on the condition that it cedes 10% to the government, and this in turn saw Treasury’s shareholding go up to 40%.
Helios Investments Partners Chief Finance Officer Paul Cunningham told MPs that Helios paid out more than Ksh585 million in fees to Ngumi and corporate law firm Anjarwalla & Khanna in the deal. He knew Ngumi as a lawyer and banker and had dealt with him on several occasions over the past five years.
Cunningham said Ngumi was brought in to help with the transaction because they anticipated there being some issues around foreign exchange, converting shillings into dollars, and he had some familiarity with the issue. Their relationship predates the investment in Telkom Kenya, and as a well-respected former banker, he was an obvious choice to bring in to help with the transaction.
Also Read: Government Acquires Full Ownership Of Telkom Kenya
Treasury’s acquisition of Helios’ stake in Telkom Kenya, just days before the elections last year, kicked up a storm, with current and former senior state officials blaming each other for what is going on.
The transaction has seen the government accused of paying too much for the company, with suggestions that the purchase price was inflated to cover payments to politically-connected brokers.
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