Bloomberg News

CMC Holdings of Kenya Suspended From Trading for Seven Days

September 16, 2011

(Updates with regulator’s comment in second paragraph.)

Sept. 16 (Bloomberg) -- CMC Holdings Ltd., Kenya’s biggest publicly traded auto dealer, was suspended from trading on the Nairobi Stock Exchange for seven trading sessions after a dispute over fees paid to a logistics company.

The suspension will “give the CMC Holdings directors an opportunity to resolve the outstanding issues, and facilitate investigations,” Capital Markets Authority Chief Executive Officer Stella Kilonzo said in an e-mailed statement today.

CMC has been overcharged by as much as 2 billion shillings ($21 million) over the past five years by a freight-forwarding company run by former CMC chairman Peter Muthoka, CMC Chief Executive Officer Bill Lay told reporters on Sept. 14.

Andy Forwarders Services Ltd., the largest supplier of services to CMC, charged the company in some instances as much as 100 times the market rate, Lay said. Muthoka, who was replaced by Joel Kibe as chairman of CMC on Sept. 9, dismissed the allegations as “utterly inaccurate and not based on fact.”

Shares in CMC fell 3 percent to 12.90 shillings yesterday, the biggest decline in two weeks.

The Capital Markets Authority has begun a probe into the dispute between directors of the company, said Kungu Gatabaki, chairman of the regulator. The authority also urged CMC to appoint independent directors to avoid similar disputes in future, Gatabaki told reporters in Nairobi yesterday.

--Editors: Ben Holland, Gordon Bell.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net.


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