Category Archives: Stanbic

Tegeta Escrow

Yesterday Harbinder Singh Sethi and James Buchard Rugemarila were charged with obtaining $22 million and 309 billion Tanzania shillings from the Bank of Tanzania in what’s been dubbed the Tegeta Escrow case.

Perhaps the best summary of the Tegeta Escrow case comes from Africa Confidential (Vol 55 – N° 19) dated 26 September 2014 –

  • Heads may be about to roll after revelations about the contested transfer of 200 billion Tanzania shillings (US$124 million) from an escrow account in the central bank, the Bank of Tanzania, to Harbinder Singh Sethi’s Pan Africa Power Solutions Tanzania Limited (PAP, AC Vol 55 No 13). The complex details of how Sethi acquired Independent Power Tanzania Ltd. (IPTL) and then raided the BoT account have now been pieced together by two opposition members of parliament, Zitto Kabwe and David Zacharia Kafulila, with the help of The Citizen and Mwananchi newspapers.
  • If Sethi’s critics are proved right, this is the country’s biggest corruption scandal to date. Based in South Africa, Sethi is a Tanzanian-born businessman with a reputation for dubious past dealings in Tanzania, Kenya, South Africa and the United States. Sethi claims to have bought 70% of IPTL’s shares from Malaysia’s Mechmar Corporation, now in receivership. Yet Standard Chartered Bank Hong Kong (SCB-HK) claims to have purchased IPTL’s debt for $76 mn. in August 2005 and says Mechmar was already in liquidation when Sethi claimed to have acquired the shares.
  • The Tanzanian behind IPTL, former BoT employee and self-styled international consultant James Rugemalira, is also under investigation over the $75 mn. that he was paid by Sethi for his company’s 30% share in IPTL.
  • Both Sethi and Rugemalira have lived up to Kabwe’s description as ‘aggressive litigators’. Their strategy has been to steer the acquisition of IPTL away from non-Tanzanian jurisdictions (Malaysia and Britain), from other interested parties (SCB-HK) and lawyers, receivers and liquidators in Malaysia and Hong-Kong. In this way, SCB-HK’s property rights in IPTL have been summarily dismissed and attempts by SCB-HK’s lawyers to negotiate a compromise with Tanesco have all been blocked. Furthermore, the findings of the International Centre for Settlement of Investment Disputes over IPTL’s overcharging Tanesco for power supplied and the proposal for a solution involving SCB-HK claims have been ignored. Tanzanian courts have been complicit in rubber-stamping IPTL’s transfer to Sethi’s PAP. None of this helps improve the country’s image abroad.


  • The unfolding details about the Tegeta Escrow case resulted in the removal of four ministers back in 2014. On Saturday, the energy minister, Sospeter Muhongo, resigned over his alleged role in the affair last year that saw $180m (ÂŁ116m) taken from the country’s central bank. The move follows the removal from office of the attorney general, Frederick Werema, the energy secretary, Eliakim Maswi, and the housing minister, Anna Tibaijuka, who was sacked over the transfer of $1m to her private bank account Chairs of three parliamentary committees have also resigned following the scandal: Victor Mwambalaswa, energy and minerals committee; Andrew Chenge, parliamentary budget committee; and William Ngeleja, legal affairs and governance committee.
  • Back in December 2014, Stanbic Bank Tanzania released a short statement on the-then parliamentary report on Tegeta Escrow and their role.


Kenya – Dubai: Fresh Exports & Chamber Commerce Trade

There’s a delegation from the Dubai Chamber of Commerce & Industry in Nairobi this week and they were hosted by the Kenya National Chamber of Commerce and Industry (KNCCI). The Dubai Chamber announced that they will open a representative office in Nairobi, their fourth in Africa, after Addis, Accra, and Maputo – to do market research, discover opportunities for partnership and value addition, support Dubai businesses in Kenya and give Kenyans information about business opportunities in Dubai.


Kiprono Kittony said Kenya imports about $900 million from Dubai and exports about $300 million. He said that some challenges of business in Kenya include double taxation between the counties, infrastructure to the counties, corruption, but that he saw endless trade opportunities for their 14,000 members in 45 counties.

Naushad Merali said that when he first went to Dubai in 1982, it was smaller than Mombasa, but it had since transformed, thanks to Sheikh Mohammed’s leadership.  He said Kenya was one country with a stable currency and Dubai investors would not have to worry about moving money in and out the country – and that while manufacturing was difficult due to dumping from Asia, the advantage was if you were doing agro-business, especially of things that are grown here. A Stanbic bank executive said they were the largest bank in Africa said they were ready to finance projects in infrastructure energy, renewable energy, tourism, electricity transmission etc. – and that while banks are able to do projects of $25 – $ 60 million, with larger than $100 – $200 million, ones there was need to syndicate across borders.


Hot button issue. Kittony also spoke of Kenyan flowers that go to Amsterdam and then get re-shipped to Dubai. He added that Kenya had developed a disease-free livestock belt that could export to Dubai and the Gulf states (GCC). Someone else said that there are only 5 Kenyan fresh products on Dubai supermarket shelves (including mango and avocado) out of a potential 70 others, and lots of fresh stuff is sent to Europe where it is repacked and relabeled before being shipped to Dubai. While someone else said the lack warehouses and charter flights from Mombasa and Eldoret were the problem, another said that there were 14 Emirates flights a week, along with others from Kenya Airways and Etihad (and Qatar) – so flights were not the problem. Another said that Kenya had simply not marketed itself fully to Dubai in terms of what it could produce and export and get to Dubai via a 4 hours flight or a 12-day ship ride. Kiprono later lamented that flights flew into Eldoret, full of cargo, and flew out largely empty – while they could carry flowers, coffee, bamboo and other things.

Shares Portfolio August 2010

Market picking up steadily since last quarterly review in May 2010

The stable
Diamond Trust ↑
Kenya Airways ↓
Kenol ↓
Scangroup ↑
Stanbic (Uganda) ↓
Uchumi ↔

– Best performer: Scangroup Safaricom up 25% this quarter
– Worst performer Kenya Airways down 10%
– In: Kenol
– Out: None
– Increase None
– Decrease None
– Unexpected gains/losses: None

Events & Outlook:
– Performance: The Portfolio is up 8% in the last three months while the NSE Index is up 10%.
– Got dividends from all the banks, which are improved performance this year. Dividend included that from Stanbic Uganda but its still a problems to cash as Stanbic Kenya is incapable of partnering with Stanbic Uganda to ease the encashment process – even better would be for Stanbic Kenya though CSFS to facilitate more share buying perhaps reinvestment of dividends to buy more Stanbic UG shares
– Sat out the KCB rights issues whose results came out today (August 10). The Bank had set out to raise Kshs 15 billion ($189 million) from shareholders but yielded 83% of that – 12.45 billion
– Scangroup’s investment in Ogilvy Africa
– Kenol rebounded from problems at battle with government to report some much improved first half profits.
– Looking forward to buying Safaricom shares, and attending their (no SWAG) AGM
– Uchumi is yet to re-list despite exiting their receivership phase

KQ leased 737 from KLM

– Privatization: The Kenya Government is short on cash but their privatization basket is still empty. Nothing has come yet from National bank and East African Portland cement, while the next infusion of cash is likely to be from Kenya Power & Lighting Company. Meanwhile the Kenya government bond market has been much more active than the equity one.

CFC Stanbic 2010 AGM

The CFC Stanbic Holdings annual general meeting (AGM) for 2010 was held on May 21 at the tented parking at CFC Centre, off Museum Hill, Nairobi. (twitter @Standardbankgrp)

The Managing Director re-capped the year’s performance of the group companies. CFC Stanbic (bank) had a flat profit of 1.9 billion [$25 million], CFC financial services (stockbroker) lost 108 million [-$1.4m], CFC Life (insurance) lost 433 million [-$5.6m] while Heritage (insurance) had a profit of 278 million [$3.6m]. He attributed the performance to impairment of the stock portfolio at the Nairobi stock exchange which declined by 60%, increased operating costs (New IT system, write-off old IT system, opening of new branches, and refurbishing/rebranding of all other branches) overall operating income was up 25% in 2009, but operating costs went up 46%. Finally, he added that the first quarter of 2010 has seen a good performance – with good earnings from forex and government securities, and the NSE rebound has good for their portfolio this year

Hot Button Issue: Poor performance of the Group /companies was cause for concern among several shareholders who asked questions citing:
– High operating expenses of 6 billion
– Item of ‘other expenses ‘ totaling 3.4 billion ($45 million) that were not detailed in the notes
-Ill-feeling, that when they approved the CFC Stanbic merger they were told that the group would have a leaner management structure would lead to cost savings across the group, and this has not happened
– The company used to be generous & give bonuses, but looking at the results, this is not going to happen anytime soon!

In reply, the Board referred back to the MD’s earlier statement that had broken down the major cost items as well as the decline in the company’s NSE portfolio that had resulted in their auditors asking that they factor in an impairment provision of about 700 million while the others were the IT costs, advertising/branding branch refurbishment across the group, not just bank business.

Why new borrowing?: a corporate bond of 2.5 billion [$32.5m]was asked about. Notes also show increase loan from IFC of 759 million and new loans from other banks – NIC (200m) and CBA (500m). MD said the bond and loans were to support their mortgage business, which has been one of their better performing lines and also support their subordinate capital position (500m).

Banking sector fraud is high even as the group invests in a new system and new products like electronic banking, there is a lot of fraud in the sector with customers losing their money to bank insider, and are Kenyan laws keeping up with new fraudsters. MD replied that the new system was safer.

Long-serving Chairman Exits: During director elections, the chairman Charles Njonjo announced that Mike Du Toit (long time Stanbic K MD), Titus Naikuni (MD of Kenya Airways) and himself who were all up for re-election were all stepping down, but added that Du Toit would take up other responsibilities within the group. On his part he thanked shareholders for their support though the years and said he was proud that the company that he, Jeremiah Kiereini (fellow powerful director), and PK Jani had started many years ago had grown into a conglomerate which now had undergone many recent changes and there were many new faces (and more women) who did not know his face, He said Kiereini, who will remain on the board for a few more years, would look after his interests but that he would still be around next year, as a shareholder on the floor, to ask questions of the board. Re-elected directors were Eddy Njoroge (Kengen MD), Fred Ojiambo (Nairobi lawyer), Jane Babsa-Nzibo and Greg Brackenridge who will be the new Bank CEO?

Bonus at next meeting: an extraordinary general meeting of shareholders will be called later in the year to approve the hiving off of the insurance business (CFC Life and Heritage) into a new company (in a deal with Liberty Holdings & African Liaison Consultants) that will also be listed on the Nairobi Stock Exchange. Current CFCStanbic shareholders will receive a dividend in specie of 1 share of the new company for every 1 CFC share they currently hold, at no additional cost.

Goodies: – lunch box (flat rice & chicken piece), soda, umbrella (which I lost an hour later)
– Scary? The annual report was 114 pages long without a single picture or CSR fluff page. Shareholders also, after several questions, approved a motion allowing the company to publish accounts in the newspapers, have it on their website or e-mail it to shareholders in lieu of having to print and mail one to every shareholder.

Kutwa Tuesday: July 8 Briefs

away from the Grand Regency

– CFC/Stanbic merger/takeover formalized: As at June 1, the combined banking groups had assets of 78.3 billion shillings [$1.26 billion], deposits of 55 billion [$888 m] and loans of 38.9 billion [$627m]
– EABS Bank is now Ecobank Kenya
– Business Cubs: Bank of Africa will launch a small business Club for clients.
Going international: building on the success of Safaricom’s M-Pesa, Vodafone will do money transfer between UK and Kenya challenging western union on phone transfers to India, Turkey, Egypt and South Africa (from Balancing Act Africa)

– Everyone lovers Safaricom; with 90% of the shares volumes since listing, the company has been added to the AIG index, NSE 20 and NASI indexes from July 1
– One month after Safaricom allocations, and despite paying an extra fee (30/= for a CDS statement) and making several trades, no new CDS statement has come in the mail

– KTN joins the morning show club with Sunrise Live – coming a few months after Citizen TV and Nation (NTV) with their ‘breakfast shows’
– There’s a new relaunched Standard newspaper out today with new layout – but their byline For Fairness, Justice, and Prosperity is straight out of Superman

– Sweden/China joint oil search: Lundin Kenya has bought a share of the field assigned to China [Block 9, Kenya].

– Having moved to cut out travel agents, Kenya Airways will next offer hotel and car booking online at their website
– Rift Valley Railways (RVR) will raise freight charges up 14.5% and will charge a fuel surcharge based on average diesel cost and US$ exchange rate from 1st august

– Kenya has no summer or winter, but the high court has a summer vacation from 1st to 8th August

Questions from the blogs
– A recap of the Kenya Re AGM
– Has tourism in the Mara recovered in 2008?
– Does EDGE or 3G after all?


Digital: KDN and the ICT Kenya Digital Village are offering free connectivity for digital villages and schools: the program targets rural cyber cafes and schools – who are willing to pay a set- up fee, and share some revenue earned with KDN

– The Barclays Bond closes tomorrow (9/7)
– KCB rights close on 18/7 – so far only NBK has offered loans for KCB rights (up to 90% finance)

– EABL: logistics manager, governance improvement manager, group audit & risk manager, application support analyst, procurement managers (2). Apply to
– The electoral commission of Kenya: registrar of political parties, internal audit manager, finance officer. D/L is 23/7 by snail mail
– Captains of B1900 C and D at executive turbine. Apply through
– Film commission of Kenya: head of programmes, hear of HR & administration, head of finance, Programmes manager, marketing assistant, legal assistant, ICT assistant, executive secretary. Apply to by 18/7
– Keroche: distributors, area sales representatives. Apply to by 11/7
National Oil Corp of Kenya: risk analysts, internal audit assistant, procurement analysts, supply analyst
– Executive director of the privatization commission which became operational in January 2008. Apply (through deloitte) to (22/7)
– Resources manager at the Rockefeller foundation. Apply (though KPMG) to by 11/7

Marie Stopes: deputy director of male circumcision project (africa) [location: zambia} and male circumcision partnership deputy project manager [location: zimbabwe] d/l is 19/7

Rhodes Scholarships (2) for Kenyans. D/L is 31/8
– World Bank young professionals program. D/L is 15/7