The National Treasury Cabinet Secretary Henry Rotich and Investment Secretary Esther Koimett were yesterday put to task by MPs on how the government shares in Telkom Kenya Ltd worth Sh34 billion were diluted.
This came as members of the Public Investments Committee claimed individuals in the Treasury may have conspired with foreigners to fleece the public through "share fixing".
Rotich told the committee that in 2007, the government sold 51 per cent of the shares in Telkom to Orange East Africa for $390 million, becoming a minority shareholder.
He said the privatisation was crucial to avoid insolvency and inject in money to restructure the company.
However, between December 2012 and June this year, the government shareholding had reduced to 30 per cent after 19 per cent of its shares were "irregularly offloaded".
Rotich said the shift was to restructure the balance sheet but failed to explain how the 9 per cent of the shares transferred on December 21 2012 cost Sh30 billion while the 10 per cent diluted on June 30 were only valued at Sh2.5 billion, the amount the government had failed to inject for restructuring.
"The privatisation was completed through an inter-ministerial committee before the Privatisation Act came to force," he said.
However, the committee members said the law came to force before the 2012 deal.
Rotich and Koimett were accused of violating the Privatisation Act by failing to notify the Communications Commission of Kenya, the market regulator of the move. Koimett later admitted that intervention of the House should have been sought.