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Brokers want Safaricom IPO audited

The Kenya Association of Stockbrokers and Investment Banks (Kasib) has made fresh demands for a forensic audit on the Safaricom Initial Public Offering (IPO). This comes after revelations made in a special audit report of the Controller and Auditor General on Safaricom IPO, dated July last year. The report states in part "The Receiving Bank had not as of December 2008 completed reconciliations with other relevant stakeholders in the IPO, and as a result it was not possible to establish the amount of proceeds yet to be remitted to the Treasury, over and above the sum of Sh49,887,137,100 received as at that date." Interestingly, all firms that participated in the IPO as co-sponsoring brokers have either been bought out, are under statutory management or still struggling to remain afloat. This consortium included Discount Securities Limited, Sterling Securities Limited, Crossfield, Tsavo and Ngenye Kariuki and Company. "Mismanagement of this IPO eroded investor confidence and plunged the market into a bear run resulting in huge losses," said Jane Njeru, Chief Executive Officer Kasib. The association argues that due to exposure of these brokerage firms to the tail end of the Safaricom IPO transaction, players like Ngenye Kariuki begun experiencing cash flow problems. "To safeguard their relationships with customers, the firms were forced to use their own resources to offset the refund demands. Source: The Standard