Two civil activists have moved to court seeking orders suspending the intended acquisition of National Bank of Kenya by the Kenya Commercial Bank.
Evans Aseto and John Kiptoo want an order to conduct independent audit of the assets of NBK by an independent audit firm and the costs of the said audit be borne by the respondents.
Through lawyer Duncan Okatch, the two further want the court to suspend any deliberation or negotiation in relation to the intended acquisition of NBK.
They also want both banks to furnish them with documents and information in respect to the intended acquisition.
Share Swap
The activists said the Banks have embarked on a share swap transaction that will see NBK duly acquired by KCB.
“The share swap or transfer is irregular on the basis that the same has been conducted in contravention of the basic tenets of the constitution, in that the National Treasury and the national Social Security Fund have up to 50 percent shareholding at NBK making it a public entity and thus the public ought to have been involved by way of comprehensive public participation process which has not been done,” said the activists.
Aseto and Kiptoo argue that the public has not been afforded a chance to air its views which would have subsequently given the transaction the green light after giving the sentiments of the Kenyan citizens considerations.
“Public participation in a transaction of this nature is couched in mandatory in the constitution and in its absence, the share swap/transfer is null and void,” they argue.
Both aver that the two banks have not obtained authorizing order by Central Bank of Kenya and Competition Authority of Kenya which is the entity mandated to oversee such transaction and subsequently grant or deny approval after careful consideration of the effect of the same would have on competition in the market.
The said application for approval by CBK and CAK would entail submissions of an extensive report on the effect of the intended acquisition such as details on the fate of the employees of National Bank once the acquisition is completed.
“In absence of such a report, the fate of the employees remains uncertain as some might end up losing their jobs.”
The activists added that in the view of the fact that both banks are listed companies trading on the Nairobi Stock Exchange, KCB has since issued a notice on the intended acquisition to the Capital Markets Act, is a clear indication that the firms are hell bend on pursuing the acquisition, the glaring irregularities not withstanding.
“Unless this court intervenes, due to the clandestine manner in which the transaction is being conducted there is imminent risk that the acquisition of NBK (which is a public property) by KCB will proceed unchecked and the same right lead to pilferage and laws of public funds.
NBK books audit
The applicants argue that the National Bank books have not been audited by the Auditor General and therefore no entries status or financial health or value is not clear and therefore it is hard to tell whether National Treasury is getting commensurate value for the intended swap.
The civil activists claim various attempts by Public Investment Committee have been futile as several summons to the directors of the NBK to appear before the committee have not been honoured and it is therefore clear beyond peradventure that the banks are not willing to shed light on the intended acquisition.
