The Capital Markets Authority (CMA) has fined KenolKobil’s ex-CEO Jacob Segman, who served for 16 years, Sh5 million for failing to disclose shareholding information in the company. This comes after the oil company paid Segman over Sh300 million earlier this year which he was owed under the employee share ownership plan (Esop).
In a letter dated August 7, 2018, addressed to Segman, CMA accuses the former chief executive of failing “to make material disclosures of your ownership interests in KenolKobil causing publication of incorrect, untrue and misleading information in the Information Memorandum on the issuance of Commercial Papers undertaken between 2008 and 2012 and in regulatory reports made and submitted to the Exchange and Authority, contrary to the provisions of Section 34 (b) of the Capital Markets Act.”
The letter signed by the CMA chief executive Paul Muthaura says that Segman also contravened Regulation 19 (1) of the Capital Markets (Securities) (Public Offers, Listing, and Disclosures) Regulations, 2002. This regulation requires the “disclosure of the aggregate of the direct and indirect interests of directors holding in excess of three per cent of the share capital of the issuer.”
The Offence
While serving as the Group Chairman and Group Managing Director of KenolKobil, the Authority found that the Segman did not disclose his interests in Energy Resources Capital Limited (ERC), one of the top shareholders of Kobil, thereafter KenolKobil after Kenol and Kobil merged in 2007.
Although Segman has denied having an interest in ERC, CMA says that he was the ultimate beneficiary of ERC’s 5.99 per cent shareholding in KenolKobil. The letter states that he used Mr Rami Haviv, “the sole director of ERC holding shares in KenolKobil as a nominee in trust for Ms Afriat Keren and Mrs Efrati Simcha” to conceal his true ownership in the company.
CMA also discovered that Segman’s claim of being entitled “to compensation payable to the majority shareholders of Kenol and Kobil for the successful acquisition of Kenol by Kobil in 2007 and to shares from dividends paid to ERC by KenolKobil” is not backed up by any evidence because there is no agreement between him and the majority shareholders of KenolKobil or an agreement for payment between him and ERC.
The Authority also says that the existence of such an agreement for payment was not made public to the regulator or the company’s shareholders.
Segman is required to pay the fine of Sh5 million to the CMA Investor Compensation Fund within 30 days. However, he has the opportunity to appeal the regulator’s decision to the Capital Markets Tribunal.
