CMC meeting row hearing set for Nov 9

October 31, 2011

, NAIROBI, Kenya, Oct 31 – The supremacy battle for the control of auto dealer CMC Motors will drag on a little longer after the courts scheduled a hearing on November 9 to establish whether the firm should continue with an Extraordinary General meeting.

This comes after Andy Forwarders, the largest shareholder in CMC with a 24 percent stake, went to court opposing the Capital Markets Authority’s move to block the EGM arguing it would interfere with ongoing investigations.

Andy Forwarders, led by its chairman and Chief Executive Officer Peter Muthoka had called the meeting in which the top agenda was to oust the current Managing Director as well as replace three directors on the board.

“CMA has not played the position of an honest regulator. It has taken a partisan position of other shareholders in CMC,” Fred Ojiambo the Lawyer representing Andy Forwarders told the court on Monday.

He said Andy forwarders contend that as a result of conflicts within the board CMC has progressively performed below par and seeks to hold the EGM to pass resolutions.

The boardroom drama that has engulfed the automobiles dealer came to the fore in September with fresh claims of improper billings to the company by the logistics company, which led to the ousting of Muthoka as Chairman of the CMC board.

Following a boardroom coup that led to the ousting of Peter Muthoka as chairman, it is now claimed that Andy Forwarders services, in which he is the Chief Executive Officer, had been overcharging CMC for logistics services.

Lay said that an internal audit had showed that Andy Freight Forwarders had been overcharging CMC over Sh2 billion.

The CMA had sought to suspend the EGM scheduled for November 21 as it was carrying an audit into the company over revelations of clandestine off shore bank accounts in Jersey (United Kingdom) operated by two former directors for many years.

While investigations are still ongoing as to how much had been siphoned off shore, one account is said to have Sh240 million.

Ojiambo said the move by CMA was interference with the petitioner’s right and a deprivation of its proper rights and that the CMA has no jurisdiction under Capital Markets Act to determine the manner in which a shareholder may exercise its legal rights under the Companies Act.

CMA through advocate Zul Alibhai urged the court to maintain the status quo saying the authority has a right to investigate the issues first before any meeting is held. Zul said the petitioner allegedly defrauded the company.

“Maintain the status quo first while we investigate the claims. We are opposed to any interlocutory orders,” he argued.

CMC also wants to be enjoined in the case and has been given seven days to put in its submissions at the court.

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