Kenyan High Court Stops Sarrai Group to Manage Mumias Sugar Company

High Court Stops Sarrai Group to Manage Mumias Sugar Company

The revival of Mumias Sugar Company has hit a wall after a Kenyan High Court canceled a 20-year-lease awarded to Uganda-based Sarrai Group to manage the ailing miller.

Presiding Judge at the Milimani Commercial Court, Justice Alfred Mabeya in his orders also removed Ponangipali Venkata Ramana Rao as the Administrator of the company.

In his place, Mr. Kereto Marima was appointed as the new administrator of Mumias Sugar Company.

Justice Mabeya said Mr. Rao ought to have called a creditors meeting to ascertain the total amount of money owed by the company which he did not do.

“His actions were only meant to protect the interest of KCB and if the lease is upheld, it would be tantamount to blessing KCB with an asset known as Mumias,” Justice Alfred Mabeya in his ruling.

“In view of the foregoing, it is imperative that an independent administrator takes over the administration personnel. That this receivership has been enforced and has yielded zero results. He takes a backseat at least for a while and gives professional administration of unions a chance to be undertaken the independent administrator to undertake all the options available in consultation with the board of creditors.”

The High Court found that he (Mr. Rao) released the assets of the company to the lowest bidder, Sarrai holdings at KSh5.8billion, and left out the highest bidder, West Kenya Sugar company limited that put in a KSh36.7 billion bid. 

Further,  he had not shown how he was going to pay the debt owed to farmers and creditors.

“It would have been essential to even have a pre-evaluation of Mumias which would have informed a result price that would have achieved the purpose of paying off Mumias debts and release it from receivership and administration. The manner in which Rao handled the leasing process did not tally with what was expected of him as an administrator.”

“A simple calculation would show leasing Mumias at Ksh 5.8billion for 20 years Mumias would perpetually remain under receivership and administration. It would permanently remain an asset under KCB and maybe a retirement home for Rao,” Justice Mabeya said.

Mr. Malima has been directed to compute all assets and debts owed by Mumias sugar company within a period of 60 days and file the same in court.

Mumias Sugar Company was placed under receivership in 2019. The Kenyan Government is the biggest shareholder owning 20%. KCB Group has 1.72% shares, Jubilee Insurance has 1.46 %, and two Standard Chartered Nominees Limited accounts at 1.4%. Individual shareholders hold 71.35% of the Nairobi Securities Exchange-listed firm.

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IK is a Masinde Muliro University graduate. His interests are in news and analysis on women's rights, politics, technology, law, and global affairs.

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