The Capital Markets Authority has terminated the services of a multinational consultancy, BDO LLP, after it failed to give evidence and clear analysis linking any Mumias Sugar director or manager to corporate governance malpractice.
Documents seen by the Star, that were submitted during a recent CMA board meeting, show the capital markets regulator had hired the Belgium-based company to investigate operations at Mumias Sugar between 2010 and 2015 following concerns over the accuracy of its financial reports among other issues.
"BDO was expected to investigate and document evidence with regard to the accuracy and completeness of the financial statements and identify persons culpable for the omissions and misstatements identified, which was not substantively addressed," states a report presented to the CMA board during a meeting held this month.
The CMA board paper no.1789 detailing the progress of the report, further indicates Mumias was to foot the Sh40 million estimated bill for the investigation which was scheduled to take place between September 2015 and early 2016.
"The draft report detailed instances where internal controls around critical operation areas were said to be weak or in instances, overriden. However, it lacked a detailed analysis and evidence of the transactions affected, the impact and value of losses arising from these weaknesses and the persons responsible for the lapses, as well as the identification of the beneficiaries in the case of losses," states the board paper.
This was the latest such investigation on Mumias Sugar Company following another done by international audit firm KPMG which singled out some individuals deemed to have been responsible for reversing the miller's fortunes from profits to losses within a few years.
The heavily-indebted Mumias Sugar widened its half-year loss for the period ended December 2015 by Sh180 million to Sh 2.26 billion.
