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CMC MOTORS Boardroom Wars
Rank: Elder Joined: 6/27/2008 Posts: 4,114
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THE PLOT THICKENS: Bill Lay has published an open letter to shareholders in the Daily Nation[p22]. Key point is that they suspect Andy Forwarders have been overcharging CMC about 300m-500m per year! Cumulative figure for last 5yrs is about 1.5b-2b. An audit is on the way to establish the exact state of affairs. Contract with Andy to be terminated today! Did some one say that Bill is Mr Efficient? No wonder the share has been on the rise.... seems the rise has little to do with Muthoka's reported buying spree - actually, there has been quite some serious foreigner participation. @Wendz; your opinion was spot on. Even though I have been in the company for quite a long time, I was always suspicious of having one guy as CEO (Forster) for so long. Nevertheless, the returns have been good. My initial investment has been more than repaid by dividends alone. And if Bill continues this way.... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 6/21/2010 Posts: 514 Location: Nairobi
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For any credit facility that would substantially affect a company's balance sheet, approval is normally seeked from the BOD. A gross conflict of interest. 'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary
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Rank: Member Joined: 1/6/2009 Posts: 98
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ESOP shares are minimal in the scheme of things. We are talking of someone who is:
1.The largest supplier services to CMC.
2.A big shareholder(and Chair of BoD)@ CMC
3.A large customer of CMC
This is also a public company. Even if it were private transactions between CMC and Andy would raise the red flag to a tax authority.
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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Any one with updates as to what happened in the press briefing?
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Funky-nilisema kunakitu. Former directors (one a supplier) have been siphoning CMC cash. To? Jersey Sehemu ndio nyumba
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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@ Mainat so it means their auditors were sleeping on their job?
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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This Company is going to dogs...are they going to witchhunt Mr Muthoka like that? Stay away from companies with governance issues...a few companies come to mind!
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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FUNKY wrote:@ Mainat so it means their auditors were sleeping on their job? This is just another classic case of enterprise corruption where the board is in cohorts with the auditor... E.g. Enron, Worldcom etc...$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Because of the its primary market (GoK, upper class, settled and aspiring middle class), CMC is potentially a very decent share. I guess guys are buying in on confidence that Lay will lay the ghosts of corruption to rest. Sehemu ndio nyumba
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Rank: Member Joined: 7/12/2011 Posts: 194
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Mainat wrote:Funky-nilisema kunakitu. Former directors (one a supplier) have been siphoning CMC cash. To? Jersey Let's just hope this time guys don't get away scot free like the Uchumi case
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Rank: New-farer Joined: 1/4/2010 Posts: 93
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Those of you who think Mr. Muthoka is being witch hunted, do you honestly believe it is right to be the Board chair of CMC and at the same time your other private company remains the Single Service Provider. Serious conflict of interests. Come on, give us a break.
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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http://www.businessdaily...-/10u7dshz/-/index.html
"The company also plans to initiate recovery process of between Sh1.5 to Sh2billion suspected to be lost in the past five years due to the alleged overcharging by the company associated with the outgoing chairman." - Good news for the shareholders.
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Think something else in water here. Why Muthoka only and not ex-CEO/FD or even the BoD itself? Sehemu ndio nyumba
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Rank: Elder Joined: 6/19/2008 Posts: 4,268
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mozenrat wrote:Wendz wrote:
If a company is practicing good governance, it is Conflict of Interest "whichever angle you look at it"... Soon enough, he might start approving credit for his "trucks-buying" company exposing us to losses incase his company fails for (lets say)reasons beyond his control .... after all, "both" companies are his, right? Complete conflict of interest it does not matter if we are benefiting now or not......
Honestly, I think we're taking this "good governance" issue too far... Surely approval of credit falls under the purview of executive and/or operational management and not the board of governors.. For some of this stuff, its a balance, by giving an ESOP to employees KenolKobil runs the risk that the employees may deliberately mistate financials in order to buoy the share price... on the other hand the ESOP enhances loyalty and could actually drive the employees to work harder if tied to performance @Mukiha, i didnt even know all that..... now we know... whenever there is a fight in the board room, someone is definitely benefiting and usually, it is not for the company's interest... @moz, not when you have a powerful shareholder who is also in the board and is a beneficiary of such transactions. governance issues are very important in organisations.... actually the ones that have seen most of the big known companies go under... this is because, after some time, your interests come first... for Muthoka, he was not going to care much if CMC gave dividends or collapsed, why? because he was milking it hard enough on another side.... he was not going to loose much by its "collapse" if any. Do you think he was going to get 300m annual dividends from CMC?... he was eating with "both cheeks"... If you ask me, Kenol Kobil would be a "sinai" situation if S's integrity is questionable... A CEO(to oversee the management) who is also technically the managing director(to implement the decision of the board and report the performance of the management) and chairs the board (which "decides" on the recommendations of the management - which is basically his own decision on management level) is a dangerous combination by all standards.... trust me.
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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FUNKY wrote:http://www.businessdailyafrica.com/Corporate+News/Ousted+CMC+chairman+takes+shareholder+war+to+the+courts/-/539550/1236542/-/w4simj/-/index.html Bill Lay is the king of CEO every company needs The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Strange saga and could easily turn into another Marshalls unless the various factions can discuss things amicably. It reads like a make believe story from Bill Lay. Sehemu ndio nyumba
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Rank: Member Joined: 9/9/2010 Posts: 546 Location: Garissa
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Aguytrying wrote:FUNKY wrote:http://www.businessdailyafrica.com/Corporate+News/Ousted+CMC+chairman+takes+shareholder+war+to+the+courts/-/539550/1236542/-/w4simj/-/index.html Bill Lay is the king of CEO every company needs I suspect you ment Kind of CEO. Note, a CEO should not be calling the shots in a BOD, he is supposed to be the top most employee of the company answerable to the Board of Directors. Bill Lay is having his way cauze he is a MZUNGU. Remove Z from the word Mzungu and that is what we perceive them to be. Forester and now Bill are pointmen for the Wazunyes, period. GM is American for those who did not know. On a business sense, Muthoka should not have been appointed even as a director of CMC. Na mwafrica ni mshenzi sana, the guy was arguing that because issues never came up during his appointment as Chairman, he should not be questioned now. Quote “The issue of my interest in Andy was well known to all the directors when I was elected chairman. The point now taken is obviously an afterthought and malicious,” said Mr Muthoka. “The law does not prohibit a company in which a director has an interest to do business with another company in which he is a director. What is required is disclosure of the interest.” He should go tell that to the birds. He should be ashamed of himself. http://www.businessdaily...-/12bkwlkz/-/index.html
Wisdom to detect when share prices hit rock bottom.
When interest on bonds keep going up, you know the bear run is on high street. When interest on bonds start leveling, the bear has met the bull and they have hit rock bottom. When the interest rates on bonds start coming down, the bull has overpowered the bear and you better be riding the bull.
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Rank: Member Joined: 9/9/2010 Posts: 546 Location: Garissa
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Wendz wrote:mozenrat wrote:Wendz wrote:
If a company is practicing good governance, it is Conflict of Interest "whichever angle you look at it"... Soon enough, he might start approving credit for his "trucks-buying" company exposing us to losses incase his company fails for (lets say)reasons beyond his control .... after all, "both" companies are his, right? Complete conflict of interest it does not matter if we are benefiting now or not......
Honestly, I think we're taking this "good governance" issue too far... Surely approval of credit falls under the purview of executive and/or operational management and not the board of governors.. For some of this stuff, its a balance, by giving an ESOP to employees KenolKobil runs the risk that the employees may deliberately mistate financials in order to buoy the share price... on the other hand the ESOP enhances loyalty and could actually drive the employees to work harder if tied to performance @Mukiha, i didnt even know all that..... now we know... whenever there is a fight in the board room, someone is definitely benefiting and usually, it is not for the company's interest... @moz, not when you have a powerful shareholder who is also in the board and is a beneficiary of such transactions. governance issues are very important in organisations.... actually the ones that have seen most of the big known companies go under... this is because, after some time, your interests come first... for Muthoka, he was not going to care much if CMC gave dividends or collapsed, why? because he was milking it hard enough on another side.... he was not going to loose much by its "collapse" if any. Do you think he was going to get 300m annual dividends from CMC?... he was eating with "both cheeks"... If you ask me, Kenol Kobil would be a "sinai" situation if S's integrity is questionable... A CEO(to oversee the management) who is also technically the managing director(to implement the decision of the board and report the performance of the management) and chairs the board (which "decides" on the recommendations of the management - which is basically his own decision on management level) is a dangerous combination by all standards.... trust me. @Wendo You must have done an MBA or Corporate Governance. Girl, you should go for Minister of Trade and Commerce when we reconvene the government. At least now you understand why many businesses in Africa do not go very far? We seem not to know even what the concept of Conflict of Interest implies. No wonder our politicians also have no problem setting their salaries arguing that there is no conflict of interest when one decides whats best for himself. Wisdom to detect when share prices hit rock bottom.
When interest on bonds keep going up, you know the bear run is on high street. When interest on bonds start leveling, the bear has met the bull and they have hit rock bottom. When the interest rates on bonds start coming down, the bull has overpowered the bear and you better be riding the bull.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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I agree with all the interesting opinions so far, but could there be more to this than meets the eye...
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