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Members of Parliament have questioned decision by the Jubilee Government to hurriedly buyback Telkom Kenya from Jamhuri Holdings Limited (JHL) to a tune of Sh6.09 billion just before the 2022 General Election.

 The MPs regretted that the buyback was ill thought, ill-timed and lacked the duty of care on the part of the officials who undertook the transactions.

According to the lawmakers, there was no urgency to have money disbursed under Article 233 of the Constitution as the acquisition of Telkom Kenya was not an emergency.

In a report tabled in the National Assembly last week, the Finance and National Planning and Communications, Information and Innovation Committee members said, for instance, said a framework ought to have been put in place for transitioning a privately-operated company to a publicly-run entity.

“In deed, this calls into question the real motive for hurriedly trying to complete this transaction under the circumstance of a major transition of the government,” the report.

Following the move, the MPs have called on Ethics and Anti-Corruption Commission (EACC) to investigate former National Treasury Cabinet Secretary Ukur Yatani and Joe Mucheru (ICT).

Also in for probe is former National Treasury Principal Secretary Dr Julius Muia.

Committees specifically want EACC to establish whether the former State officers violated the Constitution, Public Finance Management (PFM) Act, PFM (National Government) Regulations of 2015 and whether there was any conflict of interest.

But even as they called for further investigations, the lawmakers took issue with the entire transaction, saying it is shrouded in illegalities as there is no legal framework for the re-acquisition of the agencies by the government. They claimed that the assertion that the buyback of TKL was motivated by security concerns lacks independence and merit as industry experts established that private and public interests can co-exist.

 They argued that the privatization Act only provides for divestiture of state-owned agencies and not vice versa.

Reads the report: “There is no legal framework for the re-acquisition of formerly state-owned agencies by the Gok. Private investment not only drives the growth and sustainability of companies but also brings along innovations and fit for purpose skills otherwise unavailable to government run institutions. TKL has evidently served this role without questions since it was privatized in 2007”

Takes issue

The lawmakers also took issue with how the entire deal was crafted and executed after it emerged that the attorney general and the Communication Authority of Kenya (CAK) did not approve it.

They said that although Yattani, Mucheru, former National Treasury Principal Secretary Dr Julius Muia claimed that full approval was done, this was not the case.

This is because the office of the Attorney General in a letter dated August 30 last year sought for more details touching on the approvals, deed of variation and Escrow account.

Reads the report: “flagrant violations were demonstrated clearly when the National Treasury sought the approval of the board of Telkom Kenya after making payments to JHL and when the National Treasury purported to complete the transaction before securing a comprehensive legal opinion from the Attorney General and fulfilling the conditions imposed by CAK.”

It adds: “The office of the Attorney General never issued a complete legal opinion or express approval for the 100 percent buyback of Telkom Kenya from JHL/HIP as required in such a substantive transaction. This is evident from the letter dated 30th August from the Office of the Attorney General Ukur Yattani, requesting more documents and information from the National Treasury, a letter that was never responded to until finalisation of the transaction.”

On the other hand, the committee also regretted that the deal also never received full approval by the regulatory authorities, specifically the Communication of Kenya as claimed by the top state house officials as only conditional grant was given.

 The conditional grant provided by CAK was based on the fact that National Treasury was to provide a letter of comfort on the settlement of Telkom Kenya Limited outstanding debt of at Sh7.2 billion, Telkom was to provide an assurance that its customers were protected and that it was furnish the authority with a copy of CR-12 after acquisition.

 “However the National Treasury proceeded to complete the transaction without fulfilling conditions of the Communication of Kenya,” the report.