Showmanship might have been John Ngumi’s trademark when pursuing mega deals, but it has not helped the flamboyant investment banker shake off graft sleuths pursuing him over the Sh6.2 billion Telkom purchase in the sunset years of Uhuru Kenyatta’s presidency.
The former Safaricom chairperson could soon face graft charges in an extension of his legal tussle with the Ethics and Anti-Corruption Commission (EACC), even after he bent over backwards to share a good chunk of the windfall he earned from advising Jamhuri Holdings on its exit from Telkom Kenya.
Jamhuri Holdings, a Mauritius-based private equity firm, sold its shareholding in Telkom Kenya to the Kenyan government for Sh6.2 billion in a hastily crafted transaction that attracted the attention of the anti-graft watchdog.
Mr Ngumi moved to the High Court’s Constitutional and Human Rights Division seeking to end the EACC investigation, arguing that the Director of Public Prosecutions (DPP) had decided not to charge him over the multibillion-shilling deal.
However, the court disagreed and ordered the case transferred to the High Court division that handles corruption and economic crimes.
This came as the EACC revealed that it was in touch with the DPP over having the investment banker charged for his alleged involvement in the irregular purchase of Telkom Kenya’s shareholding from Jamhuri Holdings.
For a while, everything appeared to be going well for Mr Ngumi. He had helped the Uhuru Kenyatta government stitch together numerous deals, including the country’s debut Eurobond, and was later appointed Safaricom chairperson.
Hell broke loose for the banker with a taste for the finer things in life when President Kenyatta’s preferred successor, Raila Odinga, lost the August 2022 presidential election to William Ruto.
Shortly after the Kenya Kwanza administration came to power, Mr Ngumi rushed to the High Court’s Constitutional and Human Rights Division to obtain restraining orders against his possible arrest by the graft agency.
He argued that the EACC investigation was largely politically motivated and that he was at risk of arrest simply because he was an ally of Mr Kenyatta.
A month before he moved to court, Mr Ngumi appeared before the National Assembly to explain his role in the deal and why he had been paid $3.07 million.
At the time, he could not have imagined that three years later he would still be locked in a legal tussle, a pursuit he later told the court was motivated by his being the ‘blue-eyed boy of the former government.’
Shortly after being grilled by Parliament, Mr Ngumi resolved to stretch his generosity by paying Sh111.9 million in taxes to the State.
Mr Ngumi was paid the $3.07 million by Jamhuri Holdings for advising the private equity fund on its exit from the telecoms operator.
He uncharacteristically decided to share a big chunk of this windfall with the taxman, whose maxim has been to collect neither more nor less from the taxpayer.
Had the five percent withholding tax been applied to his Sh362.1 million fee, KRA would have collected about Sh18.1 million.
Instead, Mr Ngumi said he paid Sh111.9 million, giving the taxman about Sh93.8 million more than the withholding amount.
‘I made a commitment to Parliament that I would pay within one week and that is what I have done. As a consultant, I am required to pay five percent withholding tax but out of good faith, I have decided to pay 30 percent as though it is a Pay As You Earn consideration,’ Mr Ngumi told the Business Daily.
He also sought to explain to legislators why he had to be paid such a huge fee. At a joint committee hearing, he said Jamhuri Holdings needed high-level advice to divest because it could not afford to make mistakes.
‘I was paid the money because I was the best in the business. They valued the advice I gave them and it was a willing buyer willing seller (transaction),’ he said.
But the high point of the grilling was Mr Ngumi’s decision to share much of these fees with the State, in a move that many saw as his attempt to extricate himself from the trap being laid by the new administration against allies of former President Kenyatta.
Mr Ngumi may have thought that paying more to the taxman than was legally required would help shake off his pursuers.
Unfortunately, this demonstration of magnanimity has not saved Mr Ngumi, a self-described ‘deal maker par excellence.’
Mr Ngumi got an early break in raising money in the 1980s, during the coffee boom days.
At Grindlays, he helped arrange annual offshore financing for the Coffee Board of Kenya, raising money in London to make advance payments to farmers before they sold their produce.
That was in the nascent days of investment banking, during the lean Daniel arap Moi years, when the word ‘Eurobond’ – let alone the billions associated with the dollar-denominated bond – was unheard of even within corporate finance circles.
From arranging offshore financing for Kenya’s coffee sector in the 1980s, Mr Ngumi rose through investment banking and his Loita Capital Partners years.
He went on to structure major corporate and government deals before crossing paths with Mr Kenyatta in 2011, when the son of Jomo Kenyatta was serving as Finance Minister.
When they first met, Mr Ngumi said in a previous interview, they talked about ways of bringing down the high cost of interest.
‘The world is awash with capital. We just have to figure out how to access it,’ Mr Ngumi recalled telling the then Finance Minister when he asked him about options for giving the government leverage when dealing with local investors.
As the relationship between the two blossomed, so did Mr Ngumi’s profile, with many coming to regard him as the blue-eyed boy of Corporate Kenya.
He has been involved in several major deals, including Safaricom’s first corporate bond issuance when it was just finding its feet after being hived off from Telkom, and the debut Sh174 billion Eurobond issued by the Jubilee government in 2014.
However, much of this information was not gleaned by journalists or financial analysts from various filings; it was readily provided to the public by Mr Ngumi himself, including through paid-for content in which the banker was celebrated as the ‘master corporate fundraiser.’
‘I have had a good fortune of never needing to apply for a job in my life,’ Mr Ngumi said in one sponsored piece.
He went on to suggest that he may have been lucky to have come of age at a time when senior government officials were willing to take a chance on unproven young people such as himself.
‘That said, I challenge anyone to show I have not given my best in any position I have occupied,’ he said.
Mr Ngumi has never made it a secret that he loves the good things in life – luxurious cars, homes and the trappings of success.
Speaking with the measured, clipped tones associated with an Oxford education, the St Peter’s College, Oxford graduate, who studied Philosophy, Politics and Economics (PPE), once reflected on his investment-banking years in a podcast:
‘We were incredibly successful but also incredibly extravagant.’
There is something of Oscar Wilde in Mr Ngumi – the Irish, Oxford-educated playwright who embraced the good life with gusto, only to find that success and extravagance could make uneasy companions.
Wilde, who studied at Magdalen College, became famous for his flamboyant lifestyle before his fortunes collapsed and he was declared bankrupt.
Known for saying that ‘any man who lives within his means suffers from a lack of imagination,’ Wilde never managed to arrest his descent into bankruptcy.
Mr Ngumi, who seems to have a nose for money, has so far avoided Wilde’s fate.
He has admitted to being mortgaged five times, and court records are littered with cases in which he has been pursued by creditors – from the Sh11.4 million debt owed to Nibrish Chandulal Shah to a long-running dispute with the defunct Lonrho Motors over a BMW 318W that he acquired around 2000.
Yet the latest challenge facing the veteran dealmaker is not a simple challenge from a bank or a creditor. It is a challenge from the State.