It is a tale of what was coined as a noble business consortium involving Kenyan based businessmen and their Chinese counterparts.
Owing to greed masterminded by one of the co-founding directors of the consortium, schemes to dispossess his co-directors and investors was orchestrated coupled by Sh3.5billion obtained through forged documents and renewal of another Sh2billion without approval in a separate bank.
Another secret account is being operated by a lawyer to the mastermind whose law firm is also contracted by the same bank.
At its inception, Savannah Cement Limited was owned by three shareholders namely, Savannah Heights Limited (Savannah Heights), Acme Wanji Investments Limited (Acme) and Wanho International Holdings limited (Wanho) with each owning 40, 20 and 40 per cent respectively.
A Mauritius incorporated firm was used a special purpose vehicle in execution of this ploy and money was wired ostensibly to buy shares through a Westlands based law firm in Nairobi in what was famed a s a trade finance capital injection.
Currently, shareholders of Savannah Cement Limited are locked up in a court battle relating to the ownership of the company.
Savannah Heights Limited is wholly owned by Kenyans while Wanho and Acme are wholly owned by Chinese nationals.
Based on the documents filed in court, the ownership dispute emanates from the fact that Savannah Heights Limited, Wanho and Acme had signed a Memorandum of Understanding (MoU) where each of the parties had certain obligations to fulfill.
It is alleged that Acme and Wanho had an obligation of injecting in Savannah Cement Limited all the cash investments necessary to roll out a plant with a rating grinding capacity of One (1) Million tons per annum together with rollers and driers capable of increasing the thorough output to 1.5 million tons per annum or thereabout together with all the design, civil, structural, building sheds including installation and commissioning of production lines and ancillary equipment necessary for a modern state of the art cement grinding mill.
According to the court documents, Wanho did not fulfill part of their obligation and breached the terms of the MoU.
Following the breach, Wanho and Acme expressed their interest to exit Savannah Cement Limited and offered their shares to Savannah Heights Limited at a price of Sh1.5billion (USD 15,000,000).
While Savannah Heights Limited was interested in buying the shares from Acme and Wanho and actually signed an agreement to that effect, Savannah Heights Limited later declined to honour that agreement on basis that, among others, the purchase price had to be reviewed downwards in view of the breach by Acme and Wanho which breach, according to Savannah Heights Limited, had greatly affected the profitability of Savannah Cement Limited and had reduced the value of the shares.
Savannah Heights Limited alleges that in all communication to the financiers and government agencies, Savannah Cement Limited had indicated that it had a capacity of thorough output to 1.5 million tons per annum yet because of the breach by Wanho and Acme, the company could only produce half of that.
The parties then started discussing how Acme and Wanho would make good the damage, with some of the meetings being slated to take place on diverse dates in China.
One of the meetings was to be held in China and the three directors nominated to the board of Savannah Cement Limited by Savannah Heights Limited travelled to China to have a meeting with the Chinese directors representing Wanho and Acme.
While in China, two of the three directors of Savannah Height Limited (the third director is Benson Sande Ndeta who is also the chairman of the board of Savannah Cement Limited ) received an email from Benson Sande Ndeta informing them that the meeting in China had been cancelled and that another meeting would be called for in due course.
Little did they know that Ndeta was discreetly negotiating with Wanho and Acme to buy them out despite the breach and it is believed to be the sole reason why he postponed the meeting without any explanation to his Kenyan counterparts.
The Kenyan directors travelled back to Kenya.
At the time, Ndeta was in China secretly to await for the next board meeting to discuss the breach by Acme and Wanho.
While the parties continued discussing the breach on emails and agreeing on dates for the adjourned board meeting to discuss the admitted breach by Wanho and Acme, Ndeta concluded his secret buy out of Wanho and Acme and then called for a board meeting on 16th December, 2014.
One of the agendas for the meeting was to discuss the breach of the MoU by Wanho and Acme.
It was in this board meeting that Ndeta informed his counterpart directors of Savannah Heights Limited and Savannah Cement Limited that he had, through his special purpose vehicle, Seruji Limited, a company registered in Mauritius, bought all the shares owned by Acme and Wanho.
Mr. Liu representing both Acme and Wanho who was present at the meeting confirmed the position.
The other directors of the Company representing Savannah Heights Limited were extremely shocked as to how the transaction was concluded without any approval of the Board of Savannah Cement Limited.
Based on the documents filed in court, Seruji Limited appears to have gotten money from Barak Fund and Quantum Global both which are investment funds in Mauritius and Switzerland respectively.
Barak fund disbursed the funds based on an equity security but later sold its stake in Seruji Limited.
Interestingly, it does appear that following the board meeting of 16th December, 2014 where the Board of Savannah Cement Limited was notified that Acme and Wanho had exited the Company on 22nd September 2014, the Company Secretary Stephen Mwaniki Njagi hurriedly filed minutes and the relevant interim annual returns with the Registrar of the Companies showing that Acme and Wanho had sold their shares with the anonymous approval of the Board.
These were filed on 17th December, 2014.
What is in contention is that the board of Savannah Cement Limited never approved the transfer of the shares, it was rather notified.
The directors of Savannah Heights Limited have also alleged that the board resolution filed with the Registrar of Companies confirming that the board of Savannah Cement Limited had approved the transfer of the shares was extracted from unconfirmed minutes of the meeting of 16th December, 2014.
All the documents relating to the secret sale of the shares were signed by Benson Ndeta and Li who were basically the sellers and the buyers to the absolute exclusion of all other directors of Savannah Cement Limited.
In an interesting turn of events, the transaction for the sale and purchase of the shares was approved by the Competition Authority of Kenya (CAK) and yet again, it is not clear, at least to the directors of Savannah Heights Limited, how such an approval was issued given the fact that there was no single approval from the board of Savannah Cement Limited to approve the transaction.
In what appears to be a clear contradiction of the competition laws, 60 per cent of the Purchase Price for the sale of the shares was paid before the approval of the transaction was issued by the CAK.
Based on the Competition Laws, any payment of over 20 per cent of the purchase price before issuance of the approval by the CAK is prohibited and where this happens, the CAK has powers to revoke the transaction.
Savannah Heights Limited has lodged a complaint with the CAK and the matter is currently under investigation.
They both, separately expressed confidence with the CAK and gave an indication that chances of the transaction be being revoked are extremely high since there were no board resolutions approving the take over and further, that 20 per cent of the purchase price was paid before the approval by the CAK was issued. They indicated that the CAK would not want to create impunity where business executives breach the law and make away with it.
The suit in court was precipitated by, among others, a notice for an extraordinary general meeting (EGM) from the Company Secretary to Savannah Heights Limited where the agenda of the meeting was to appoint and approve certain people as directors of Savannah Cement Limited.
Such people were said to be the nominees of Seruji Limited are Ndeta’s wife and brother.
Following the EGM notice, Savannah Heights Limited filed an application in court under certificate of urgency seeking an order of the court to stop the EGM Meeting until the shareholding dispute was resolved.
In delivering her ruling in the matter, Justice Farah Amin ordered that the EGM could proceed but the directors could not act on any resolution passed at the EGM pending the hearing and determination of the suit in which the shareholding of Seruji Limited at Savannah Cement Limited is challenged.
On the date slated for the EGM, the Company Secretary of Savannah Cement Limited was petitioned that Savannah Heights Limited had not passed a resolution on how to vote at the EGM and as such, the meeting was adjourned.
Justice Amin has also put in place an interim board to run Savannah Cement Limited on the application of Ndeta.
Ndeta is not new to controversy, he was named adversely in the collapse of Mumias Sugar Company and Dubai Bank Limited.