NAIROBI, Kenya, Jan 7 – The board of East African Portland Cement Company (EAPCC) says the company is suffering financially owing to the decision by acting Industrialisation Minister Amason Kingi to suspend the directors.
The board told the High Court on Friday to block the Minister’s move because the company cannot function without a board.
“The company might fall on its knees as a result of the confusion,” EAPCC’s lawyer Adan Mohammed told the court.
The company has been in the news in the last two weeks after the Industrialisation Minister sent the eight-member board including the Managing Director Kephar Tande packing pending a forensic audit into allegation of malpractices and misappropriation of funds.
However, four board members moved to court to challenge the decision to fire them, terming the action ‘illegal.’
The matter was further complicated by an interpretation given by Attorney General Githu Muigai that EAPCC was not a state parastatal and as such the government does not have the right to hire or fire any director at the cement producer.
The government holds a 25.3 percent stake while National Social Security Funds’ (NSSF) shareholding stands at 27 percent. French conglomerate, Lafarge holds a 41.7 percent stake while the remainder is held by the public through listing on the Nairobi Securities Exchange (NSE).
Although NSSF is a government agency, the two bodies operate as two separate entities and are treated as two shareholders of the cement firm.
On Friday, the court heard that there is serious confusion as to who is in charge at the cement company adding that firm’s shares cannot be traded at the NSE.
At the same time, the suspended directors who are seeking reinstatement argued that the minister and the PS have no authority to take the decision.
Their advocates claimed the decisions are illegal, ultra-vires, irrational and contrary to provisions of Article 47 of the constitution.
Kingi has objected to their reinstatement until a forensic audit into alleged loss of funds is finalised.
The minister argued on Thursday that recalling the board before the probe is completed will cause ‘substantial injustice’ as the directors might interfere with investigations and that gross misappropriation at the firm would not be unearthed.
The minister wants the expenditure amounting to Sh13 million questioned by the Kenya National Audit office be looked into first.
The audit is expected to take one month and the minister intends to make the outcome public.