Former CMC chairman faces off with regulatorOct 31st, 2011 | By MrJob N. Okemwa | Category: Media Release
The battle to control auto dealer CMC Motors will play out in the courts today as Capital Markets Authority (CMA) and Andy Forwarders face off over the status of planned shareholders meeting seeking to replace four directors including its CEO.
The Capital markets regulator is opposed to the meeting scheduled for November 21, arguing that it will derail the ongoing forensic audit into the company’s finances should the extra-ordinary general meeting (EGM) replace four directors key to the probe.
Ousted CMC chairman Peter Muthoka and CEO of Andy Forwarders called the EGM and put the removal auto firm’s managing director Bill Lay and replacement of three directors top on the agenda.
The three are Paul Wanderi Ndung’u, Joe Kibe (current chairman) and Andrew Hamilton.
“There will be a court hearing on Monday (today) that will give direction on the issue of the EGM,” a lawyer representing one of the parties told Business Daily on Friday—marking the first time CMA and Mr Muthoka will come face to face in court.
Andy Forwarders— which is the single largest shareholder at CMC with a 24 per cent stake — made a pre-emptive move on Thursday by obtaining a court order from Justice David Majanja barring the regulator from stopping the EGM.
It argued in court that CMA has no power to stop shareholders from meeting to deliberate on issues concerning their company.
But on Friday Justice Majanja withdrew the order and quit the case after it emerged that he was related to Fred Ojiambo, a senior partner at Kaplan &Stratton, the law firm acting for Andy Forwarders—setting the stage for today’s court hearings.
The boardroom war was set off by the ouster of Mr Muthoka on September 8 as chair of CMC after he was accused of breaching corporate governance standards by being head of the auto firm’s board and supplier through his logistic firm Andy Forwarders.
CMC’s management also accused him of overbilling them by up to Sh2 billion in a period of five years—prompting the capital markets regulator to stop trading in the motor dealer’s shares at the Nairobi Securities Exchange and order a forensic audit into the company’s finances.
Mr Kibe reckons that the special general meeting is aimed at derailing the audit and secure Andy’s multi-million shilling contract with CMC, adding that his partners will quit the board should CMA clear Mr Muthoka of the alleged breaches.
“If an independent forensic audit clears Mr Muthoka of the offences we have accused him of, I will resign from the company’s board. There will be no need to spend money calling for an EGM,” Mr Kibe told Business Daily yesterday in a telephone interview.
“If on the other hand the audit confirms the accusations then I expect him to resign as a director of CMC,” he added.
A major clash is expected at the Bomas meeting that is also likely to reveal the full might and influence of the two warring camps.
It is understood that the ousted chairman secured the backing of a number of minority shareholders to cement his influence in the company. The minority shareholders have a 41.3 per cent stake.