The proprietor of Savannah Clinker company Benson Sande Ndeta was Thursday arrested ahead of arraignment over a Sh700 million fraud probe.
His co accused Charles Hills Jr from the USA is wanted to face similar charges.
Ndeta was arrested and grilled before being locked up in custody pending arraignment with among others forgery, Conspiracy to Commit a Felony, Conspiracy to Defraud, Making a Document without Authority, Obtaining Execution of a Security by False Pretences, Obtaining Registration by False Pretences, Obtaining Credit by False Pretences and Uttering False Documents.
This is after the Office of the Public Prosecutions approved charges proposed by the Directorate of Criminal Investigations.
Senior prosecutor Jacinta Nyamosi wrote to the DCI on November 25 and directed that upon charges, a warrant of arrest shall issue and an extradition request shall be made to the competent authority of the USA for the surrender of one Charles Hills Jr from the USA to Kenya to face the said charges. “A further Mutual Legal Assistance request may be made for assistance in further investigations including to obtain Charles Hill Jr’s specimen signatures, handwritings for purposes of further forensic investigations, and the recording of notarized statements touching on the subject matter.”
Following the arrest of Ndeta, top Azimio leaders led by Stephen Kalonzo Musyoka and Eugene Wamalwa trooped to Muthaiga police station to seek his release on bond.
Ndeta is the leading bidder in the pending buyout of Bamburi Cement company
The investigations showed the acquisition by Ndeta of the 4,500 shares in Savannah Cement resulted in directors Donald Mwaura Kiboro and John Gechanga becoming minority shareholders in Savannah Cement.
This led to boardroom wrangles and rivalry within the company as a result to which the two did not attend board meetings, a fact which made the confirmation of minutes and approval of board resolutions impossible.
The investigations found out that pursuant to an approval by the Board of Directors of Savannah Heights at a meeting held on 16th November 16 2017 and attended by the two directors but not Ndeta, Kiboro transferred 300 of his shares in Savannah Heights to Falcon Ventures Holdings LLC, represented by Charles Hill JR for a consideration of Sh700 million.
“The purchaser defaulted in payment of the purchase price, whose last payment date was 2nd February 2018, as a result of which the share sale/ purchase between Kiboro (seller) and Falcon Ventures Holdings LLC (the purchaser) fell through. There was thus no transfer of shares in favour of Charles Hills Jr,” the probe file says.
Sometimes in 2017, the management of Savannah Cement through Ndeta, in a confidential information memorandum submitted to Barclays Bank of, Kenya Limited applied for the financing of the Savannah Cement’s factory’s expansion project for a sum of US dollars 37,000,000.
The probe shows the bank through offer letters dated 4th October 2017 addressed to the Director of Savannah Cement agreed to finance the factory’s expansion project through a facility sum of USD35,000,000. The offer letters were to be executed by the directors/ shareholders of the two corporate entities owning Savannah Cement; Savannah Heights and Seruji as guarantors to the facility.
“Despite the foregoing, and the fact that Charles Hills Jr vas not lawfully authorised to transact any document on behalf of Savannah Heights, and also noting that Kiboro was still a shareholder/ director of Savannah Heights and Savannah Cement in the register of members held by Registrar of Companies, Charles Hill Jr fraudulently executed six security documents purporting himself as a Director/ Chairman of, Savannah Heights offering corporate guarantee the loan facility of US dollars 35,000,000 granted by Barclays to Savannah Cement.”
“Charles Hills Jr purportedly signed the said corporate guarantee documents in a criminal conspiracy scheme with Ndeta who knew his partner Directors/ shareholders in Savannah Heights were Kiboro and Gachanga and not Charles Hills Jr, the documents were accordingly a forgery,” said the probe.
Charles is an American national from the State of Delaware in USA.
“There being no doubt that Ndeta and Charles Hills Jr not only irregularly and illegally signed the corporate guarantee documents in in a manner that clearly amounted to forgery but also presented the said documents to Barclays Bank which relied on the forged documents to approve and release to them the facility sum of
UD dollars 35,000,000 the Director of Public Prosecutions (DPP) has directed that Ndeta and Charles be arrested and jointly charged.”
Ndeta’s company is the leading bidder in the pending buyout of Bamburi Cement company and had promised to pay Sh25.42 billion for Bamburi’s entire stake, which is Sh1.81 billion more compared to the Sh23.59 billion that Amsons had offered.
In its competing offer, Savannah Clinker said it would pay Bamburi’s shareholders Sh70 per share, which is Sh5 more than the Sh65 per share offer made by Amsons.
Both prices are premium on the current share price of Sh64.50 a share and Sh42 per share in July when Amsons made its offer.
Ndeta, listed as the owner and executive chair of Savannah Clinker, was the majority shareholder of the troubled Savannah Cement until July last year when it was placed under administration.
The administrator has recently started the process of selling its assets to recover money owed to KCB Group and Absa Bank Kenya.
In the offer to Bamburi, Ndeta said he is in the process of exiting as director of Savannah Cement. Amsons had earlier said it had received an irrevocable undertaking from Bamburi Cement’s major shareholder, Holcim.
“Savannah Clinker Limited (the competing offeror) notifies the public that it has on August 27, 2024, served Bamburi Cement with a notice of intention to acquire up to 100 per cent of the ordinary shares on Bamburi,” said Savannah Clinker in the notice published in the dailies.
“The competing offer price will be Sh70 for each ordinary share of Bamburi.”
The firm noted its offer was a premium of 64.55 per cent on Bamburi shares over the last 30 days when it traded at an average of Sh42.54.
In a bid to upstage Amsons, Savannah Clinker said its offer would be fast-tracked with a completion date of February next year against Amsons’ offer that is expected to be concluded by November next year.
It also pointed out that its offer only needed approval by the local competition watchdog – the Competition Authority of Kenya (CAK) – unlike Amsons offer which would be subject to approval by the regional Comesa Competition Commission.
Holcim, the Swiss cement giant, owns 58.6 per cent of Bamburi’s total issued share capital through Fincem Holding (29.3 per cent) and Kencem Holding Ltd (29.3 per cent). Kenyan institutions and individuals own an estimated 32.17 per cent of Bamburi shares while another 9.23 per cent is held by other foreign investors.
Following its offer, Amsons said it had “received an irrevocable undertaking” from Fincem and Kencem and further said that “under the terms of the Undertaking, each of Fincem and Kencem has irrevocably undertaken to Amsons to… not solicit, entertain, negotiate or accept any offer to purchase the Subject Shares other than the Offer.”
Amsons, a family-owned business founded in 2006, has diversified from its roots in bulk oil and petroleum products to become a manufacturing and energy conglomerate with over $1 billion (Sh130 billion) in annual revenue.
Its cement operations include a 6,000-tonne per day facility and Mbeya Cement, recently acquired from Holcim.
Savannah Clinker’s Ndeta on the other hand is an old hand in Kenya’s cement industry. He was the chairman of one of Kenya’s oldest cement makers, the East African Portland Cement, in 2003.
He teamed up with local and foreign shareholders to start Savannah Cement in 2012, which grew fast to claw market share from the industry’s older players, with a 15 per cent share of the market by 2015.
Savannah Cement has however been weighed by debts that were taken as it sought to implement ambitious growth plans.
The firm was put into administration last year in July and at the start of this month, the administrator invited buyers to express interest in acquiring Savannah Cement’s different assets including the cement milling plant and land. The firm owes different creditors Sh18 billion, of which Sh14 billion is owed to local lenders KCB Group and Absa Bank Kenya.
Shareholder fights may have also contributed to the collapse of what was a fast-growing cement maker. Sande and his fellow shareholders have been in vicious and lengthy fights over the control of the firm.
Initially, Savannah Cement was owned by a group of Kenyan and Chinese investors. Kenyan firm Savannah Heights owned 40 per cent while Chinese investors through Wanho International and Acme Wanji Investment owned 60 per cent of the cement maker.
Savannah Heights was owned by Benson Ndeta (35 per cent), John Gachanga (35 per cent) and Donald Mwaura (30 per cent). The squabbles began in 2014 when the Chinese firms exited and sold their stake to Seruji, owned by Ndeta and saw him emerge as the majority shareholder in Savannah Cement.
The other two local shareholders protested, arguing that they too should have been offered a right to buy the Chinese stake on their exit.
Email your news TIPS to Editor@kahawatungu.com or WhatsApp +254707482874