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Kenya watchdog probes Safaricom ownership

NAIROBI, March 19 (Reuters) - Kenya’s investment watchdog has asked Britain’s Serious Fraud Office (SFO) to help an inquiry into the ownership of Safaricom, the country’s biggest mobile phone operator which the government plans to float, lawmakers said on Monday.

Safaricom was founded in 1999 in what was long believed to be a 60/40 joint venture between government-owned Telkom Kenya and Britain's Vodafone VOD.L.

A parliamentary watchdog is investigating press reports that Mobitelea Ventures Ltd, a Guernsey-registered firm, owns a 5 percent stake.

The chairman of the Public Investments Committee (PIC), Justin Muturi, said he had briefed two SFO officials on the watchdog’s attempts to determine whether these reports were true and get more information about Mobitelea.

“We have indicated we would appreciate any assistance from their end,” Muturi said.

“I’ve already had a private meeting with two of them. They wanted to get background.” Safaricom officials declined to comment. Vodafone also declined to comment.

Muturi said Vodafone named Mobitelea as an adviser to its original $20 million investment in Safaricom -- months after Vodafone struck a preliminary deal with the government in 1999.

The government plans to sell part of its Safaricom shares through an initial public offering (IPO) later this year. Analysts say Safaricom is worth about $2 billion and the IPO is likely to attract Kenyan investors wanting to own a piece of east Africa’s most profitable company.

It recorded pretax profit of 12.2 billion Kenya shillings

($175.6 million) in the year ended March 31, 2006 -- a 44 percent rise on the previous year.

“We are concerned about what equity belongs to the public of Kenya. We would want the whole truth to be told before flotation,” Muturi said.

He was unable to say when the PIC would present its report to parliament.

Analyst Robert Shaw said he hoped for more clarity on the case.

“The suspicion everyone has is that a third party got a slice of the cake,” he said. “Until it is proven otherwise, people will continue to believe this.”

((Additional reporting by Helen Nyambura-Mwaura))

((Editing by Erica Billingham; nairobi.newsroom@reuters.com; tel +254 20 224 717))

($1=69.49 Kenyan Shilling) Keywords: KENYA SAFARICOM

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