Citibank mounts defence over IPO

March 2, 2009

, NAIROBI, Kenya, Mar 2 – Citibank has broken its silence over allegations that its delay in disbursing refunds for the Safaricom Initial Public offering (IPO) is the cause of the myriad of problems being experienced at the Nairobi Stock Exchange.

A number of brokers have in the past blamed the bank, which was the leading receiving bank for the Safaricom IPO, for delaying the reconciliation process between them and the bank.

“Citi has undertaken the process of reconciliation in a meticulous and conscientious manner and has maintained an open door policy for brokers to present all outstanding issues,” a statement from the bank clarified.

According to the bank, the delivery of refunds was strictly in accordance with instructions received from the government through the various agencies that were involved in the IPO.

“These instructions were to issue payments directly to all applicants and, according to the prospectus, the preferred method of refund was through electronic transfers directly to applicants’ bank accounts,” the statement further read.

The bank is alleging that it did receive some complaints from some investors to the effect that they were coerced to fill certain forms mandating some brokers to deal in the refund cheques with the help of some commercial banks.

“In yet other cases, some brokers transacted in refund cheques without the express authority of the investors. Central Bank is investigating the matter.”

The bank noted that all brokers have duly signed the reconciliation certificates attesting to the completeness of the reconciliation process between themselves and the bank.

However in a number of forums, stockbrokers have blamed the bank for the delays in refunds with others even claiming financial strains as a result of sorting out the issue by paying investors using their own money.

Citi stated that it had undertaken additional actions to assist in addressing any questions and issues raised by brokers after the closure of the IPO, including numerous communication and requests of meetings with the brokers to address any remaining issues.

Speaking at a forum a few weeks ago, Association of Kenya Stockbrokers chairman Jos Konzolo accused Citibank of being arrogant over the issue.

“When we went to see Citibank, in a typical American/Nigerian way they were arrogant; and am not afraid to say this,” Mr Konzolo stated.

The chairman however continued to say that the issue was being resolved among all the key players in the IPO so that the problem is resolved.

He said Citibank had agreed to do a final reconciliation and if the results were not satisfactory, a forensic audit on the entire IPO payment system would be done.

“We are hoping that will come to the end of this quickly, in any event before the next IPO, so that we lay a more successful framework and foundation for the next IPO,” he said.

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