PPRuNe Forums - East African Safari Air / Kegode versus Ogden

Sorry, it's a bit long... Seen on the East African Standard newspaper - Financial News, and although most in Kenya have obviously read it (rumours were persistent!), I thought it might interest some people further afield.

http://www.eastandard.net/financials...ws09080408.htm

Kegode versus Ogden
By Nick Wachira
A look at the events that led to a bitter legal battle after the sale of the East African Safari Air
Things were not supposed to end this way. At least for the families of Anthony Ambaka Kegode, 41 and Adam Craig Ogden, 41.

For three years, the Kegodes and the Ogdens had lived with each as happy neighbours at Hardy Estate, in Langata, Nairobi. They had known each other on and off for a decade and had gotten closer in the last three years when the Kegode allowed the Ogdens to let their house.

Kegode’s American wife Elizabeth and Ogden’s wife Karen were best friends. They all went to the same clubs, gym, and played polo together. Since they share the same plot, their kids still play together. Among their friends in Kenya’s jet-set socialite, the friendship between the Kegodes and the Ogdens was widely respected.

"Kegode is a great guy who has time for everyone and I have all along considered him as my mate," said Ogden in an interview at the Aero Club of East Africa last week.

Today, both families are entangled in a vicious legal battle in which Ogden is demanding that the Kegodes return Sh136 million that they took from East African Safari Air before they sold it to him. The Kegodes have counter-sued and denied the allegations raised in the lawsuit. In addition, Kegode is even questioning Ogden’s employment status under Kenya’s immigration laws.

In the Africa aviation industry, both men were making serious waves. In less than two years, and at a time when the global aviation industry had undergone its most painful downturn in the wake of the September 11, 2001 terrorist attacks in the US and the scars of the Sars virus, Kegode had bucked conventional wisdom by launching an international airline, East African Safari Air.

In a matter of months, he had transformed a scrappy charter operator grossing Sh1.28 billion (US$16 million, according to recent audited accounts) into a respected international airline with estimated Sh4.8 billion (US$60 million) in revenues by December 2004. Kegode suddenly was not only playing in a fast and furious world of high stake games, but could not resist a few vanities that usually come with being an international airline business mogul. He named one of his Boeing 767-300 ER, Mary Rosamond, after his mother-in-law and the other one, Elizabeth, after his mum.

He speaks passionately of Rosamond’s maiden flight to London’s Heathrow Airport and the sense of pride and achievement he felt.

"We had reached the highest level of achievement," says Kegode. "When I bought the 767-300 ER, the guys at Boeing formally acknowledged. I was the first individual and private airline in Africa to dry lease two 767-300s. These are US$150 million dollar planes a piece."

Then things started tumbling down and his newly acquired status was in jeopardy. Kegode knew that his airline was facing very serious financial problems and he believed that things were going to work out. However, he claims that he did not know that the rescue plan would take a new twist. In the course of the following week, Ogden would buy East African Safari Air for what Kegode calls "a song" and he would be edged out of the company.

This, he claims to have discovered on the Sunday morning of May 30, 2004, when the full extent of the bad blood between him and Ogden came clearly in the open. On that day, Ogden was in the Safari Air’s office at Wilson Airport together with Captain Kirin Patel. Apparently, Kirin had unknowingly pressed the call button on his cellphone and had continued engaging in a conversation that went like this: Kegode was responsible for bringing down Safari Air and Ogden is the good and aggrieved neighbour who had been brought in to package a rescue deal to save Safari Air from going bankrupt. If the Ogdens managed to bring in the Sh320 million (US$4 million) package that was needed to save the airline, Kegode would be required to move aside. Kegode would be edged out of the company and the company would refuse to remove personal guarantees that he held with the banks to discipline him and keep him in line. On the other end, Kegode says that he put the conversation on speakerphone and listened together with his wife as the plot unraveled with shock. Ogden confirmed that this conversation did in fact happen.

"There is nothing to hide," said Ogden, "It was very clear that Kegode had made a series of bad decisions that had threatened to bring the company down and he had to get out of the way to save the airline." From interviews between the Kegode and Ogden camps and from documents filed with the Commercial Courts, the Financial Standard has established that the events behind this lawsuit happened in the two weeks between May 19, 2004 at 2.50 pm and June 4, 2004 at 2.00 pm.

The bad blood was however sown by an agreement and a debenture that Kegode is alleged to have signed on December 5, 2003 with Chase Bank. Documents show that on that day, Kegode raised a debenture (under a sole signatory) against all the planes owned by Safari Air and East African Air Safari Express for a loan guarantee of Sh76 million and Sh16 million (US$200,000). If the debenture had only been for Safari Air’s assets, there would not have been any problems at all, says Ogden. Using the assets of Express was another matter because Ogden claims that these were his planes. He only discovered that this had happened on May 19, 2004, and he was not amused.

"This day was a turning point," says someone familiar with the matter. "The fight began on that day. When Adam confronted Kegode, he asked him how he could mortgage the assets of Express without seeking his approval."

Since Ogden already knew the extent of Safari Air’s insolvency and was already involved in crafting a financing package, he feared that since the end was very near, Express would go down as well.

"We called a crisis meeting of Express shareholders attended by [Ogden, Elly Aluvale and Kirin Shah] and after deliberations we realised that for Express Air to be salvaged, Safari Air had to be saved."

Things were nearing the end, but then, Kegode had started from a humble beginning.

"If there is anything like a Kenyan dream as the Americans say, I have lived it," says Kegode, "I come from the post-Independence generation."

The end of this article at the address I post at the beginning...