President Ruto ‘linked’ to alleged fraudulent deal between UK’s Diageo and EABL
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Ruto name dragged into the alleged fraudulent sale of shares by East African Breweries Limited (EABL) to UK multinational, Diageo Limited
Ruto name dragged into the alleged fraudulent sale of shares by East African Breweries Limited (EABL) to UK multinational, Diageo Limited.
Senators are looking into the alleged fraudulent purchase of shares in East African Breweries Limited (EABL), and President William Ruto’s name has come up in the parliamentary committee hearing.
MPs questioned the recent purchase of a further 15% share in EABL by British multinational alcoholic beverages corporation, Diageo Kenya Limited, for Sh22.7 billion.
The committee members criticized an agreement signed in March of this year, which raised Diageo’s ownership stake in EABL from 50.03 percent to 65 percent.
The development follows a petition filed in the Senate by Rono Nicholas, sponsored by Bomet Senator Hillary Sigei, alleging fraudulent activities within EABL.
However, EABL Chief Executive Officer Jane Karuku defended the transaction, describing it as above board and a case of “willing seller, willing buyer”.
Ms Karuku explained that Diageo acquired the additional stake through a public offer to all EABL shareholders for Sh22.7 billion, which was approved by the Capital Markets Authority and relevant regulators.
“This transaction was the largest single foreign direct investment in the Kenyan stock market in 2023, with Diageo paying a total of Sh22.7 billion to EABL shareholders in the market,” Ms Karuku told the committee.
She further added that President William Ruto even approved the deal between Diageo and EABL
“This was acknowledged by His Excellency the President Dr. Ruto on March 22, 2023, during the bell-ringing ceremony at the Nairobi Securities Exchange as a vote of confidence by foreign investors in the local market.
The EABL boss downplayed the petition’s allegations that Diageo’s recent acquisition of shares was a fraud, claiming that the shares were acquired for onward transfer to a new buyer at a much higher value for the benefit of Diageo shareholders.
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The petitioner alleged that the onward sale of the shares was agreed with the Heineken/Castel Group and that the purchase of the additional shares was intended to ensure that the Heineken/Castel Group would have a controlling interest in EABL after the onward sale.
Mr. Rono further alleged that the onward sale was prompted by Diageo’s desire to fraudulently evade tax liabilities that EABL had allegedly hidden through massive bribery of KRA and National Treasury officials, claiming that the company had manipulated the water and alcohol content of its products to change the tax bracket of its products, allegedly managing to evade more than Sh875 billion in taxes to date.
However, Ms Karuku told the committee that there was no evidence to substantiate the wild claims made by the petitioner and asked the committee to treat the petition as a false allegation.
“As part of its disclosures in the 2023 public offer, Diageo Kenya disclosed that it had not entered into any agreement or arrangement to sell EABL shares to any other person. It is our position that the petition lacks credibility and has no legal or sound basis,” she said. However, Uasin Gishu Senator Jackson Mandago expressed concern over Diageo’s recent moves to sell some of its beer operations in the African market to the Castel Group, citing Cameroon, South Africa, Namibia, and Ethiopia.
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