In 2009, Ramalinga Raju took India’s corporate scene by surprise when he resigned as chairman of Satyam Computer Services, the fourth-largest software exporter at the time. He admitted that the company had been overstating revenues for years – a scandal in India knowns as “India’s Enron, and he could no longer keep that lie running saying “it was like riding a tiger, not knowing how to get off without being eaten.” The same phrase can be used against 600,000 Kenya Tea Development Agency (KTDA) farmers, they have been riding a tiger (government) not knowing how to get off and are now being eaten. When the government started interfering with the KTDA management, I was among those who vehemently protested the interference because it was a privately-owned entity. Wisdom dictated that anytime the government is given a chance to take a step to intervene in the management issues of a private entity, it always takes a stride and before long a journey of takeover. Before government interference, the company was largely profit making and the issue was about mismanagement bordering conflicts of interest from directors with long tenures. At the time, a section of Kenyans supported government interference saying it has a right to intervene from a public interest angle. Today, KTDA has more problems than before. It is now reported that KTDA took a loan of Sh18.2 billion to pay an early bonus to farmers ahead of last year’s general election. The agency mortgaged its shares to the tune of Sh18.2 billion to pay an early bonus to farmers. The agency was reportedly under pressure from the previous government to pay the bonus to sway votes in favour of a certain presidential candidate in last year’s polls. This is the main reason why some of us were completely opposed to the government interfering with KTDA because the result is always known, the company priorities will intertwine with the political agenda of the moment and shareholders will be the biggest losers. Now, 600,000 shareholders were paid bonuses from a loan, which they will end up servicing at an expensive rate. KTDA has denied these reports that it borrowed money to pay an early bonus. Though the question they aren’t answering is why the bonus was paid early and then a debenture recorded a few months later. KTDA will find it hard to shake the government off its back because the financial mess it finds itself in will have to be mitigated through government help and 600,000 shareholder farmers is a bog constituency looking at it from a political lens and the government would want to align with them. It seems like Kenyans have a long way to go in learning that government intervening in private entities has only one end, making the problem worse and recovery out of reach.
Source: Business Daily