The government says the KES 204.3 billion it received for 15 per cent of Safaricom is non-refundable. Attorney General Dorcas Oduor and Treasury Cabinet Secretary John Mbadi make that argument in separate sworn statements, called affidavits, dated 17 September. The affidavits are part of the government’s appeal against the High Court judgment that voided the sale to Vodafone Kenya. They want the Court of Appeal to throw that judgment out, and to suspend it until the appeal is decided.
On 15 September the High Court declared the sale unconstitutional, null and void. Its last order says the shares “are hereby restored to the ownership of the Government of Kenya on behalf of the people of Kenya”. The full judgment doesn’t order any money back to Vodafone Kenya, the company that bought the shares, which is wholly owned by South Africa’s Vodacom Group. That gap is the government’s first complaint: the shares would come back to the state with no matching order to refund what was paid for them.
What the government is arguing
The appeal also points to a second payment. Vodafone Kenya paid KES 34 each for 6,009,814,200 shares, which is the KES 204.3 billion. Vodacom also paid KES 40.2 billion upfront for the dividends the government would have earned on the 20 per cent it kept. Together that’s the KES 244.5 billion Treasury took in when the trade closed on 30 June.
The other argument is about how the shares are held. Safaricom is listed on the Nairobi Securities Exchange (NSE), and its shares sit with the Central Depository and Settlement Corporation (CDSC), the company that keeps the electronic record of who owns every listed share in Kenya. The government says steps to carry out the High Court’s orders could be taken at any time and, once taken, would be “difficult or impossible to reverse”.
So it’s asking for a stay, a court order that pauses the judgment while the appeal runs. Without one, the government says its appeal would be “nugatory”. In plain terms, it could win the appeal and find there’s nothing left to win back. The 190-page filing also says the case raises “questions of grave public interest touching on fiscal planning, the stability of the capital markets, investor confidence and the country’s external position”.
What the Court of Appeal said in June
The High Court froze the deal on 18 May. Treasury asked the Court of Appeal to lift the freeze. Those opposing Treasury’s application argued that once the sale went through, it couldn’t be undone. On 26 June, the appeal judges disagreed. “The shares of Safaricom PLC will remain capable of being restored to the relevant party with appropriate refunds being made, should those be the order that may ultimately issue,” they ruled. The freeze came off, and the trade closed four days later.
The High Court quoted that paragraph in its 15 September judgment, right before it listed its orders. Funny, the government is now telling the same appeal court that the refund part can’t happen.
Where the money went
The KES 244.5 billion isn’t sitting in a Treasury account. Under the National Assembly’s approval of the sale, all of it, the dividend advance included, had to go into the National Infrastructure Fund. That’s a state investment company that buys stakes in infrastructure projects meant to earn money. As we reported on 14 September, the fund holds about KES 340 billion. Most of it came from Safaricom and the rest from the Kenya Pipeline Company IPO.
What happens next
Businessman Tony Gachoka, Professor Fredrick Onyango Ogola and the other petitioners who won in the High Court were given less than a week from 22 September to file their replies. The Court of Appeal will then set a mention, a short sitting where it gives directions and fixes a date to hear the stay application. No date has been set. Vodacom said on 16 September that it would appeal too and ask for its own stay.
If you own Safaricom shares, nothing changes while this runs. The 25 per cent held by ordinary investors was never part of the sale and isn’t touched by the orders. Safaricom closed at KES 36.20 on Wednesday, above the KES 34 the state accepted in June and up from KES 35.10 the day after the judgment.
The mention is the next date to watch. Until the Court of Appeal rules on the stay, the High Court’s order handing the 15 per cent back to the government stands, and the government is the one asking the court to suspend it.
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