Business

Written by Administrator

Trust is at the heart of every business transaction. No party will readily enter into an arrangement where possibilities of back stabbing, underhand deals or double dealing are evident.

These vices aggravate business risks, explaining why they largely exist in the unregulated underworld—not civilised world — where honour is not just an alien but also a subject of ridicule. That is why it sounds quite out of the ordinary that Treasury can explain away the premature opening of a financial bid from one consortium of law firms that is seeking to advise on the lucrative Safaricom initial public offer (IPO).

The flotation is of great interest to the investing public as well as observers, not to mention that the Government is banking on it to finance a sizeable chunk of its budget. It is too much of a coincidence that it is the same consortium bid without the benefit of a clarification from Treasury. Treasury’s explanation that the financial bid opening was by mistake — at the level of a clerk for that —fails to convince as does that of an oversight in sending out the clarifications.

Through those two actions — despite all agreements reached with the law firms involved —Treasury might have compromised the integrity of the entire exercise at a time when the global capital markets are rigorously assessing Kenya’s ripeness for borrowing from the global financial markets. The breach on the tender protocol casts doubts on Treasury’s neutrality in the matter. More so it points to a deliberate effort by a junior staff to peep into what are supposedly confidential and embargoed documents.

What is being passed off as an innocent mistake might actually be a sneak preview of how things run at the Treasury when it comes to IPO related transactions; which have drawn controversy in the past for being an exclusive members club. With allegations of cartels heavily made against winners of lead transaction advisors and sponsoring brokers, Treasury had sought to reverse the trend by requiring new brokers to be roped by the IPO ‘big boys’.

Intense lobbying saw this requirement dropped apparently because of inadequate local capacity, a self defeating argument since the action was meant to enhance this in the first place. The careless mistake by the investment secretary’s office is giving canon fodder to critics of the ongoing divestiture exercise. A thorough investigation and action on the motivation behind and the shadowy characters in prematurely opening; only one bid should be launched.