Four Kestrel Capital employees have been named in a report indicating that they solicited for stock buyers in the days leading to the KenolKobil’s buyout. The four are Chris Miriti, Christine Kuria, Sally Kotut and Amanda Onyango. Also in the mix are stock market trader Aly-Khan Satchu, former CEO of Kestrel Capital Andre Desimone, Alice Muturi, Sheemah Rameschandra, Gwen Kinisu, Mehul Patel, Kunal Bid and Chandrakant Shah, all have been accused of buying shares through insider knowledge.
It is said that “the planners of a high-profile case of insider trading at the Nairobi Securities Exchange (NSE) were so meticulous in their get-rich-quick scheme that they bought KenolKobil shares in bits just before an announcement was made that the oil marketer was being acquired by French firm Rubis in order to avoid detection.”
The above traders are reported to have bought all the shares they could get their hands on immediately the announcement was made, hoping to make at least a half a billion in the scam. This they were to execute by purchasing shares from unsuspecting shareholders for Sh15 and then selling the same to Rubis at Sh23.
“Everything could have gone according to plan had the CMA not noticed suspicious large movement of shares within the week preceding the announcement of KenolKobil’s acquisition on October 23 last year.” A source revealed.
It is reported that in a week’s time, KenolKobil moved 433.8 million shares valued at Sh6.1 billion in the six days of trading to October 23, a day before the Rubis deal was made public. Unlike a week before the deal where only 472,500 shares stocked.
They not only lost the deal but CMA also recovered more than half a billion shillings from seven of them. The CMA further recommended the barring of Mr Ali Khan Satchu and Kestrel’s former CEO Andre Desimone who have been found guilty of the scam from holding any management positions in listed companies or trading at the NSE for one to five years.
The two will pay a fine of Sh2.5 million each or serve a jail term of upto 20years.
HOW IT HAPPENED
Kenolkobil was, until the buyout by Rubis, majorly owned by Wells Petroleum, a firm owned by former Kanu-era minister Nicholas Biwott.
Kestrel Capital, which was selected to effect the buyout, is run by Mr Biwott’s son-in-law Charles Field Marsham.
Mr Desimone resigned from Kestrel in April while Mr Marsham has been cleared of any wrongdoing.
Mr Satchu, the report says, used confidential information he had been given by Mr Desimone on the impending buyout to advise his clients to buy out KenolKobil shares
Mr Desimone’s intention was that Mr Satchu would have used the information in order to acquire shares for himself, but the Rich Management Ltd CEO betrayed him, according to investigations.”
“It was during this time that Mr Satchu enquired from Mr Desimone about the procedure, mechanics and flow of funds from a foreign bank account to settle in Kenya,” says the investigation report.
“Mr Satchu wanted to know if the funding could come directly to Kestrel and if Kestrel would consider opening an offshore account for one of his clients,” says the report.
“Unknown to Mr Desimone, Mr Satchu wanted this information in order to pass it to his clients, who were on standby,” adds the report.
And on October 16, with the timing right, as Mr Desimone was out of the country with his family on a school break holiday and with just a week to the announcement of Rubis acquisition of KenolKobil, the share acquisition frenzy was kicked off.
Mr Kunal Bid, for instance, bought shares worth Sh43.1 million in the six days hoping to gain Sh23.4 million.
Mr Mehul Patel and Mr Praksha Patel bought shares worth Sh25.9 million hoping to get Sh13 million.
And even on being notified of the suspicious transactions by Stanbic Bank, Mr Desimone “advised them that they were above board and instead of informing CMA, he decided to protect himself and Mr Satchu”.