The High Court, on Friday 4 approved West Kenya’s petition to become party to the proceedings filed by sugarcane farmers challenging the leasing of Mumias Sugar with hearing dates fixed for four consecutive days starting February 14th to 17th, 2022.
The farmers are contesting the lease on grounds that it was undertaken in an opaque manner and awarded to the lowest bidder, Sarrai Group without regulatory approvals.
Justice Alfred Mabeya enjoined the parties seeking to be part of the suit and directed them to file their papers within three days and the applicants to file responses within three days. The parties were directed to file written submissions within seven days starting February 7th, 2022.
“All parties seeking to join the proceedings are enjoined and all applications on record must be responded to within 3 days. All written submissions must be done before February 7, 2021,” said Justice Mabeya.
He also added that the matter is of great urgency and should be expedited to save what is left of Mumias Sugar and to ensure that the aggrieved parties get the justice they deserve.
“The dispute should be determined expeditiously. It must be resolved at once without much delay,” Justice Mabeya said.
West Kenya had filed for a petition to be enjoined as the sixth plaintiff in the case presented before the High Court.
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The application for a joinder followed West Kenya’s concerns that the sugar plant (Mumias Sugar) was handed over to Sarrai Group, which was the lowest bidder in a manner “shrouded in secrecy and opacity.”
West Kenya noted that the leasing process was conducted without transparency and accountability and that it fell short of the principles of the statutory duties the receiver-manager has in the treatment of all creditors.
West Kenya had offered a significantly higher bid at 150 million per month compared to Sarai’s 24.3 million per month, yet the lease was awarded to the latter.
In total, West Kenya Sugar bid 36 billion shillings to Mumias Sugar against Sarai Group’s 5.84 billion shillings, which will never settle the liabilities of Mumias. After 20 years the monetary lease payments would only equate to approximately 27 percent of all Mumias liabilities which are over 29 billion shillings.
In West Kenya’s argument, its bid would have settled all Mumia’s debts including farmers and employees alongside paying the secured and unsecured creditors’ debts, and the Kenya Revenue Authority, which is demanding in excess of 10 billion shillings in taxes.
For this reason, West Kenya, through senior counsel, Paul Muite, told the court that they deserved to take over the ailing miller having been the highest bidder.
It also said that the receiver-manager breached their imposed duty of full and frank disclosure. West Kenya was disqualified by Rao because it (West Kenya) would have controlled 41 percent of Kenya’s sugar industry if it was offered the lease.
By disqualifying West Kenya on a personal determination of dominance, it violated the CAK’s provisions of Section 23(2)(a) of the Competition Act 2010.
Competition Authority of Kenya (CAK) says no merger approval has been submitted to them in relation to the leasing of the assets of Mumias Sugar and it is evident that Rao’s decision to hand over the assets of the company to Sarrai Group is in blatant disregard and violation of the law and amounts to criminal conduct under Competition Act 2010.
The matter has since attracted lots of other interested parties including Mumias Outgrowers Company (Moco), which argued that it had a stake in the case as Mumias owes it 3.2 billion shillings.
The matter was previously presented to Justice Winfidah Okwany but will be handled by Justice Mabeya in her absence. When the case comes for a hearing starting February 14th, the parties will be highlighting the written submissions.