Appeals Court lifts order blocking govrt's sale of Safaricom stake to Vodacom

 

Parliament approved government plans to sell 15 per cent stake in Safaricom. [File, Standard]

The Court of Appeal has lifted High Court orders that had blocked the government's planned Sh204.3 billion sale of its 15 per cent shareholding in Safaricom Plc to Vodacom Group Ltd.

In a unanimous ruling delivered on Friday, Justices Patrick Kiage, Lydia Achode and Aggrey Muchelule set aside the conservatory orders that had halted the transaction pending the hearing and determination of a constitutional petition filed by Tom Gachako and nine others before the High Court challenging the legality of the share deal.

The appellate court allowed the transaction to proceed pending the hearing and determination of the government's intended appeal.

In their ruling, the Kiage-led bench held that the government had met the legal threshold for the grant of a stay after demonstrating that its intended appeal was arguable and that allowing the conservatory orders to remain in force would render the appeal nugatory.

The application was filed by the Cabinet Secretary for the National Treasury and Economic Planning, the Cabinet Secretary for Information, Communications and the Digital Economy, the Attorney General, the Ministry of the National Treasury and Economic Planning, the Ministry of Information, Communications and the Digital Economy, and the Privatisation Commission.

The applicants sought to suspend the conservatory orders issued by the High Court on May 18, which restrained the government from proceeding with the intended sale, transfer or alienation of its 15 per cent shareholding in Safaricom pending the hearing and determination of constitutional petitions challenging the transaction.

The appellate judges found that the proposed appeal raised bona fide issues deserving judicial consideration.

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"We have no difficulty finding that the intended appeal herein is eminently arguable."

The court said the more critical question was whether the intended appeal would be rendered nugatory if the conservatory orders remained in place.

The government argued that the transaction, valued at approximately Sh204.3 billion, together with an upfront payment of Sh40.2 billion in lieu of future dividends, was intended to finance budget support, infrastructure development, fiscal stability and the Sovereign Wealth Fund.

It further contended that prolonged suspension of the deal risked the purchaser repricing, delaying or abandoning the transaction altogether.

The Court agreed, saying the government's concerns could not be ignored.

"We think, with respect, that the picture of loss, adverse effect and prejudice to the public interest that has been painted by the applicants is not one that we can unsee or ignore."

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The judges observed that delaying the transaction would impose a high cost on the public purse.

"We have already adverted to the not insignificant loss of Sh70 million per day from the delay in the receipt of funds. Courts must consider what would be reasonable and prudent in the management of public funds," the Kiage-led bench ruled.

The judges added that safeguarding public resources constituted a compelling public interest.

"The public interest commands a decided interest in safeguarding public resources, achievable by unshackling the transaction from the conservatory order in the instant case."

The Court of Appeal also rejected arguments that allowing the sale to proceed would permanently defeat the constitutional petitions, holding that the issues raised in those proceedings could still be determined by the High Court.