Setting the record straight on issues at CMC Holdings Ltd
A public statement by Jeremiah Gitau Kiereini.
I have served this country in many senior positions; both in the public sector as Chief Secretary, Head of the Civil Service and Secretary to the Cabinet and in the private sector as Director and Chairman of many companies including East African Breweries Limited, CMC Holdings Ltd and many more.
I have served this country in many senior positions; both in the public sector as Chief Secretary, Head of the Civil Service and Secretary to the Cabinet and in the private sector as Director and Chairman of many companies including East African Breweries Limited, CMC Holdings Ltd and many more.
In a lifetime of dedicated service to the country and the business community, my conduct has always been beyond reproach and following considerable media reports regarding events at CMC Holdings Limited (“the Company” or ”CMC”), I now feel compelled to clarify some of the issues raised as follows:I was at all material times a non-Executive Chairman of the Company. In such capacity, and as is the usual practice, I did not deal with the day-to-day details of accounts and management responsibilities. That was the exclusive preserve of the Chief Executive Officer (CEO) and the management of the Company. I did not at any time own any shares in the Company although a family Company, Kingsway Family Holdings Limited presently owns 12.5% of the shares of the Company. It’s also instructive to note that I am not a Director of the Company, having resigned voluntarily in March, 2011. I value and cherish the long and mutually rewarding relationship which I have had with CMC since 1984.
I have at all times co-operated, submitted and voluntarily given all material facts truthfully to each and every inquiry or investigation concerning the Company. I appeared before the forensic investigation teams from PriceWaterhouseCoopers (“PWC”) and WebberWentzel and duly provided them with all such information as I had pertaining to the Company. My lawyers, duly instructed, also appeared before the ad hoc Committee appointed by the Capital Markets Authority (“CMA”) and made representations on my behalf.
I am, however, dismayed that despite the adverse media reports touching on my integrity, not a single journalist or media house has ever sought my comment and/or clarification either directly or through my legal counsel before publishing the highly scandalous allegations. I am therefore constrained to issue this public statement to set the record straight.
The former CEO of the Company, Mr. Martin Forster who served the Company for 33 years made a public statement on 28th March, 2012 regarding his involvement and assessment of the issues and he exonerated me fully and unconditionally from any dishonesty or wrong doing. Coming from the CEO with whom I worked for many years, this is an important vindication of my integrity and reputation.
The explanation and information disclosed to me over the operation of a scheme where commissions from manufacturers (Land Rover, Jaguar and Nissan UD) were retained in a foreign account named Corival (1996) was that the entity was a subsidiary of CMC Holdings and my understanding was that the arrangement was in the best interests of CMC and its employees. It is wrong for any report, be it the PWC Report or the Webber Wentzel Report or any other, to characterize commissions payable by manufacturers as “over invoicing”. CMC was, and is entitled to commission payments as standard practice by vehicle manufacturers worldwide. My understanding at all material times was that the Company was receiving commissions, in the ordinary course of business and applying the same as the management deemed to be in the best interests of the Company, its business and employees.
The establishment of the Corival bank account was done by Mr. Paul Benzimra, a son of the then CEO, Mr. Jack Benzimra and a Mr. Stanley Lewis. There is absolutely no truth in the allegation that I was party to the establishment of the Fairvalley Trust. I was informed of the existence of this trust by Mr. Jack Benzimra when he was CEO because it had already been established before I joined CMC.
As I came to learn subsequently, the Fairvalley Trust received funds from the Corival bank account in good faith basically to optimize CMC interests. It is instructive to note that Mr. Benzimra, Mr. Martin Forster and myself were at various times Directors of CMC, and in that capacity, kept the Trust on-going securely at all times.
If this were not the case, nobody would have known there was such money and members of CMC management would eventually have lost it, if that had been any part of our plan or intention! I am disappointed that my efforts to preserve and secure Company funds have been misconstrued deliberately and maliciously with a view to tarnishing my reputation and subjecting me to public ridicule.
The incumbent Directors, Chairman of the Board and the CEO of the Company bear a similar responsibility and it is my hope and belief that the Trust is still an on-going viable asset managed to the benefit of past, present and future employees of CMC as per the instrument establishing it.
The use of Corival funds to lend money to CMC is true and was based on prudent and strategic considerations. CMC Holdings had borrowed funds from the African Development Bank (“ADB”) to finance a new building in Kampala in an effort to keep up with business expansion locally. After about a year, it was realized that the foreign currency loan from ADB was increasingly too expensive in relation to local currency revenues.
Thus the Corival foreign currency account was used to pay off ADB and the funds re-paid to the Corival account by the local unit at a much lower interest rate. I am not aware of any “business model” where the Company borrowed money in order to lend it.
On the accusation that the Board appointed a Company Secretary who was not qualified, my understanding was that the position was held by that Mr. Shashi Shah, who also served as Finance Director but was qualified as Company Secretary as required by law. Mr. A.l. Musotsi was designated as a ’Minutes Clerk’ who merely took minutes and never signed any official document, or minutes as Company Secretary.
On the issue of any statutory disclosure on my part, I do not understand how a non executive member of the Board would communicate with CMA to inform them of non-compliance with the Corporate Governance Guidelines. I believe that such is the duty of the CEO. I also believe that if there was any non-compliance, the external auditors of the company would have brought the matter to the attention of the Board. Let me explain that at all times, every year, we had external auditors who gave us a clean report and never questioned or qualified any of the reports or accounts of the Company.
In the context of the foregoing, one has to appreciate the role of a non-executive Chairman of any Board of Directors. In such position, I was not involved, and neither was I expected to be involved, in the day to day running of the Company. The CEO and his management team had been hired to do that and it was not my role to micro-manage them. I appeared in CMC offices only when I had to chair Board meetings, usually once a quarter.
For anybody to now allege publicly and sensationally, without a shred of evidence, that I “stole’ “looted’ “stashed” and “hid” Company funds is the height of irresponsible and unprofessional journalistic practice. I have been defamed in the grossest way possible and my reputation and standing violated irresponsibly but I have retained my calm and composure because as the adage goes, the truth will always come out and prevail.
I aver publicly and in utmost good faith, that at all times when I served at CMC (as indeed in all other places at senior public and private positions in my long career), I have always acted responsibly, applied myself diligently and exercised all necessary caution and honesty to preserve the dignity and effective service that has given me a fulfilling life. I fully intend to continue on this path and no amount of mudslinging or vindictive manipulations will deter me from my life-long resolve to render such service as I can to my country and fellow citizens.
Finally, it is inaccurate, malicious and a violation of my basic human rights to speculate adversely on my suitability to serve on the board of any company, public or private. My ultimate vindication is my record of diligent and honourable service in both the public and private sectors. That record speaks for itself and will not be tainted by unproven, unsubstantiated and malicious allegations made against me.
Similarly unfounded and malicious allegations driven by speculative and self-serving motives, have been made about my family company’s shareholding in CMC. We are and shall continue to be committed and steadfast shareholders of the Company regardless of the unfortunate goings on fuelled by partisan interests which have no regard for the business interests of the Company. I urge all the parties concerned to put the interests of the Company first and to chart a new course beneficial to the Company, its shareholders and employees.
I therefore reject and condemn in the strongest terms possible the sustained smear campaign against me and my reputation.
A lot of the falsehoods, half-truths and defamatory allegations peddled in the media in the recent past concerning me and my role in the Company could have been avoided if any effort had been made to give me a hearing and to convey my side of the story.
I am a firm believer in truth, fairness and justice and I do not think it is too much to expect the same from others.
Dated this 1 4th day of May 2012
Signed:
Jeremiah Gitau Kiereini (EBS, EGH)
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