CMA in Legal Feud With Its Appeals Body Over BOC

The Capital Markets Tribunal (CMT) paid a Nairobi lawyer Sh250,000 to write a report that it used to determine a long-running dispute pitting BOC Kenya Limited against capital markets regulator - the Capital Markets Authority, it has emerged.

The contract, which the tribunal insists is within the provisions of the relevant law is now at the centre of a legal dispute that is about to begin at the High Court.

CMA in legal feud with its appeals body over BOC

The CMA, which lost an appeal against BOC Kenya before the tribunal, now claims that contracting of a third party to write a judgement is evidence of lack of capacity by the tribunal to preside over matters for which it is constituted.

In a letter to the tribunal, CMA is demanding that it be allowed to examine the contract documents that the tribunal considers private and confidential.

"The tribunal takes great exception to this encroachment and interference with its independence and internal procedures," said Ms Pauline Nyamweya, the CMT's secretary.

CMA's lawyer, Mr George Oraro, while declining to comment on the merits of the case, told the Business Daily, that the reason his client wanted to scrutinise the contents of the research done by Mr Jeremiah Makokha Nyegenye is to determine whether the law was followed to the latter as the report formed the basis of the tribunal's judgement.

In its reply to CMA, the tribunal insists that the research was neither part of the record or proceedings of the tribunal nor was it an exhibit produced before the tribunal, and could therefore not be made public.

On November 8, Lady Justice Roselyn Nambuye, ruled in favour of the CMA and ordered that the minutes as well as the research work be handed over to CMA's lawyers.

"It is clear from the terms of reference that the research was intended for purposes of writing of the award. In the absence of that denial, it is only fair that it be given to the other party as well as the appellate court when the merits of the award is being inquired into," said Lady Justice Nambuye.

The tribunal has lodged an appeal against the decision and has filed a constitutional reference case, claiming that its rights had been contravened.

Mr Nyegenye, whose research is at the centre of the storm, was hired as a researcher on February 17 this year.

The terms of the appointment indicate that Mr Nyegenye was to study and review the pleadings, proceedings and submissions of BOC and those of the CMA and to identify a chronology of events, the facts and issues for determination of the case.

Mr Nyegenye was to prepare a report on his key findings and then present the same to the Tribunal. He was to be paid Sh250, 000 at the end of the 20-day work.

Though the CMA got orders to be given the research material, the tribunal is yet to comply.

Chacha Odera of Oraro and Company Advocates has however guaranteed the court that he will not execute contempt proceedings against CMT until November 26 when the suit comes up for hearing again before Lady Justice Nambuye.

Should the CMA win the case, shareholders of Carbacid Investments who agree to sell their shares to BOC Kenya- which is bidding for effective control of the liquified carbon dioxide manufacturer - will get a compensation package worth Sh1.4 billion .

Under a proposal filed with the CMA, the shareholders will earn a special dividend of Sh320 million at a rate of Sh30 per share and pocket another Sh251.2 million -Sh23.55 per share - in cash payment for their equity.

They will further benefit from new shareholding in BOC Kenya with two Carbacid shares yielding slightly more than one BOC share (one Carbacid unit will yield a 0.555 unit in BOC Kenya).

In the share swap, the 10.6 million plus shares in Carbacid Investments will yield 5.92 million new shares in BOC Kenya, which will be accommodated through an increase in the latter's shareholding.

The new 5.92 million shares, at the last traded price of Sh140 per share, had a market value of Sh830 million. The special dividend, however, will be paid from Carbacid's accounts, meaning the takeover will cost BOC Kenya about Sh1.1 billion inclusive of transaction costs.