Mumias Sugar Case Far from Over as Mr. Rao’s Integrity is Questioned

By Soko Directory Team / Published March 3, 2022 | 4:31 pm




KEY POINTS

There was an unusual hurry in awarding the lease to Sarrai Group and this cannot speak well about the integrity and accountability of Mr. Rao.


Mumias Sugar Sarai Group Mumias Sugar Company entrance.

KEY TAKEAWAYS


The lease is intended to defraud poor farmers, employees, unsecured creditors, and shareholders. We urge you to allow the notice of motion to prevent take-over of the assets of Mumias by Sarrai Group as it is illegal.


The Mumias Sugar Company saga where five farmers challenged the leasing of the sugar plant to Sarrai Group continues to take twists and turns as the case builds against the integrity of the receiver-manager, Ponangipalli Venkata Ramana Rao.

In the case, which is currently tabled before High Court’s Justice Alfred Mabeya, 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.

The farmer’s lawyer, Mr. Kibe Mungai told the court that the lease was granted to Sarrai Group which was the lowest bidder at 5.8 billion shillings leaving out  West Kenya Sugar which was the highest bidder at 36 billion shillings.

While making his submissions, Mr. Mungai noted that the main purpose of placing the company under receivership was to address its indebtedness.

He noted that the lease should be able to generate sufficient resources to pay all debtors, particularly Kenya Commercial Bank, thereby leaving the company in a stable condition to be returned to its owners, directors, and shareholders.

“There was an unusual hurry in awarding the lease to Sarrai Group and this cannot speak well about the integrity and accountability of Mr. Rao,” the lawyer added.

He also took issue with Mr. Rao’s assertion that West Kenya would control at least 41.95 percent of the total sugarcane crushing capacity per day in Kenya.

ALSO READ: Key Issues Political Manifestos Must Address for Better Economic Growth

Lawyer Paul Muite adopted Kibe’s submissions, adding that the issues being raised by the plaintiffs are serious. He said claims by Rao on market dominance ought to be handled by the Competition Authority of Kenya which has data to make that decision.

“You must be occupying 50 percent in the market to be described as dominant,” added Muite.

He also pointed out that Mumias is a valuable company in terms of asset base and that West Kenya Sugar had offered 36 billion shillings in addition to a monthly rent of 150 million shillings, an upfront deposit of 900 million shillings as security for the monthly payment, and a bank guarantee security bond of 500 million shillings.

Ms. Maureen Odeck for Mumias Outgrowers said Rao ought to have operationalized his appointment as an administrator of Mumias, adding that he handed over the assets of the company without seeking approval from the Competition Authority of Kenya.

She added that the secret manner in which the lease was granted will prejudice 77,000 farmers who are owed 3.7 billion shillings by the sugar miller.

“The lease is intended to defraud poor farmers, employees, unsecured creditors, and shareholders. We urge you to allow the notice of motion to prevent take-over of the assets of Mumias by Sarrai Group as it is illegal,” she submitted.

Sarrai Group defended its position by claiming that the lease was not marred with “improprieties, fraud and apparent corruption as averred”.

The Group added that the farmers have failed to place before court convincing material to demonstrate corruption in the process leading to the award of the lease to the company.

According to Sarrai, the assets of Mumias Sugar Company are wasting away because of the orders stopping its operations.

Meanwhile, another law firm, Wekesa, and Simiyu Advocates has written to Mr. Rao seeking a copy of the lease entered into with Sarrai Group on December 22nd, 2021.

In the letter copied to the High Court among others, the firm asked Mr. Rao to demonstrate how long it will take for Mumias Sugar to be fully operational under the lease as well as appointing authority as a Receiver and when the first payment was made under that lease.

The firm also sought a copy of the evaluation criteria, and the particulars of payments Mr. Rao has made to himself as receiver/manager’s charges per annum since he was appointed the receiver up to 31st December 2021.

“Please furnish copies of the consents procured by yourself and the successful bidder from the Competition Authority and the Capital Markets Authority and any other statutory bodies as condition precedents prior to entering any lease and handing over the company assets to Sarrai Group,” the letter adds.

Wekesa and Simiyu Advocates are calling for the scrutiny of every aspect of the lease for due proceedings.

Meanwhile, the County Government of Kakamega still holds that the suit against the leasing process is misconceived, incompetent, and does not show a reasonable cause of action against the county.

Justice Mabeya will resume hearing the case from March 8th to 10th, 2022.




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author








Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2024
  • January 2024 (238)
  • February 2024 (227)
  • March 2024 (190)
  • April 2024 (133)
  • May 2024 (157)
  • June 2024 (145)
  • July 2024 (106)
  • 2023
  • January 2023 (182)
  • February 2023 (203)
  • March 2023 (322)
  • April 2023 (298)
  • May 2023 (268)
  • June 2023 (214)
  • July 2023 (212)
  • August 2023 (257)
  • September 2023 (237)
  • October 2023 (264)
  • November 2023 (286)
  • December 2023 (177)
  • 2022
  • January 2022 (293)
  • February 2022 (329)
  • March 2022 (358)
  • April 2022 (292)
  • May 2022 (271)
  • June 2022 (232)
  • July 2022 (278)
  • August 2022 (253)
  • September 2022 (246)
  • October 2022 (196)
  • November 2022 (232)
  • December 2022 (167)
  • 2021
  • January 2021 (182)
  • February 2021 (227)
  • March 2021 (325)
  • April 2021 (259)
  • May 2021 (285)
  • June 2021 (272)
  • July 2021 (277)
  • August 2021 (232)
  • September 2021 (271)
  • October 2021 (305)
  • November 2021 (364)
  • December 2021 (249)
  • 2020
  • January 2020 (272)
  • February 2020 (310)
  • March 2020 (390)
  • April 2020 (321)
  • May 2020 (335)
  • June 2020 (327)
  • July 2020 (333)
  • August 2020 (276)
  • September 2020 (214)
  • October 2020 (233)
  • November 2020 (242)
  • December 2020 (187)
  • 2019
  • January 2019 (251)
  • February 2019 (215)
  • March 2019 (283)
  • April 2019 (254)
  • May 2019 (269)
  • June 2019 (249)
  • July 2019 (335)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (313)
  • November 2019 (362)
  • December 2019 (318)
  • 2018
  • January 2018 (291)
  • February 2018 (213)
  • March 2018 (275)
  • April 2018 (223)
  • May 2018 (235)
  • June 2018 (176)
  • July 2018 (256)
  • August 2018 (247)
  • September 2018 (255)
  • October 2018 (282)
  • November 2018 (282)
  • December 2018 (184)
  • 2017
  • January 2017 (183)
  • February 2017 (194)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (189)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (164)
  • February 2016 (165)
  • March 2016 (189)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (247)
  • September 2016 (233)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (164)
  • April 2015 (107)
  • May 2015 (116)
  • June 2015 (119)
  • July 2015 (145)
  • August 2015 (157)
  • September 2015 (186)
  • October 2015 (169)
  • November 2015 (173)
  • December 2015 (205)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950