It was a sigh of relief when activist Okiya Omtatah took to the High Court to challenge former Treasury Cabinet Secretary Henry Rotich’s directive in the CBA-NIC deal.
Rotich had waived stamp duty costs on the deal, citing public interest, yet these are two private interests and benefits accrued will go to private pockets. None of the two banks has government shareholding to warrant public interest, meriting an exemption.
Section 106 of the Stamp Duty Act reads “The Minister may on the recommendation of the Minister for the time being responsible for matters relating to land, by notice in the Gazette, direct that any instrument or any class of instruments shall be exempted from the provisions of this Act if he is satisfied that it is in the public interest so to do.”
It is the section cited by Henry Rotich when he gazetted the exemption dated June 26th, estimated by Business Daily to be worth sh350 million, money that government needs at a time when it is facing cash crises.
It is estimated that the value of 53 per cent stake at Sh35 billion based on the book value of Sh65 billion when the deal was announced—putting the stamp duty charge at more than Sh350 million.
The NIC and CBA deals transaction is taking place through a share swap between the two banks, with current NIC group shareholders owning 47 percent of the merged entity and CBA shareholders including the Kenyatta family owning 53 percent of the merged entity.
The Kenyatta’s family currently holds a 24.92 percent stake in CBA while Phillip Ndegwa family, which founded NIC Bank, has a 25 percent in the bank.
Ideally, the transfer of CBA shares since it is not listed in the Nairobi Securities Exchange attract a stamp duty of one percent. However, since NIC Bank is listed, the transfer of its shares is exempted from the tax.
The merged bank which will have a new name will have an asset base of sh466 billion, making it the region’s third-largest after KCB and Equity in the country.
Okiya Omtatah has filed the case before the Constitutional and Human Rights division of the High Court.