MUMIAS SUGAR BIDDERS

Politicians face questions after court ruling on Mumias

"The CEO and Rao owe the public an explanation as to why they sanctioned the lowest bidder for Mumias."

In Summary

• Justice Mabeya gave Marima 60 days to report the list of both secured and unsecured creditors and their amounts to court then start the new leasing process.

• Defendants in the case were PVR Rao who was the Mumias Sugar Company administrator, County Government of Kakamega, The Attorney General and Competition Authority of Kenya among others.

Mumias Sugar Company entrance
FILE Mumias Sugar Company entrance
Image: HILTON OTENYO

Politicians are under fire to explain their earlier support of the ejected Ugandan firm Sarrai Group, which had the lowest bid of Sh5.8 billion for leasing Mumias Sugar Company.

Senior Counsel and Safina Party leader, Paul Muite and who represented one of the aggrieved bidders, West Kenya in court, said that the political leaders needed to explain why they supported the Sarrai Group lease and yet they should have farmers' interests at heart.

"The County Government of Kakamega should have the farmers' interest at heart" Muite added.

The County Government had moved to Kakamega High Court in January to stop Tumaz and Tumaz Enterprises, a firm associated with Mwale City investor Julius Mwale from interfering with Sarai's Mumias lease.

Tumaz had offered Sh27.6 billion for the leasing of Mumias Sugar assets, court papers showed.

Tumaz and Tumaz and West Kenya were enjoined as plaintiffs in the farmers' case against the awarding of the lease to Sarrai Group.

Defendants in the case were PVR Rao who was the Mumias Sugar Company administrator, the County Government of Kakamega, The Attorney General and the Competition Authority of Kenya among others.

During the ruling of the case on April 14, Justice Alfred Mabeya of Milimani  High Court revoked the lease award to Sarrai Group and removed Rao from his position.

Mabeya appointed Kereto Marima as the new administrator for Mumias Sugar Company.

"This court has considered the allegations made against the leasing process. Rao awarded the lease to the lowest bidder while there were higher bidders, without giving any justifiable explanation," Justice Mabeya said.

He further noted that there were no other reasons given by Rao to explain why the other bids that were higher than that of Sarrai Group of Sh5.8 billion were disqualified.

"The manner in which Rao handled the leasing process did not tally with what was expected of him as an administrator."

He said the lease was not in line with the best interest of the company and wondered why Rao refused to produce the lease in court.

"The same (lease) was withheld from the court without any explanation. What did it contain that Rao did not want the court to see?" he posed.

Muite said he was surprised that KCB, a tier-one bank that appointed Rao as its receiver-manager, would have sanctioned the lease for about Sh6 billion.

"The CEO and Rao owe the public an explanation as to why they sanctioned the lowest bidder for Mumias," Muite said.

Muite affirmed that Marima will revive the company in a transparent manner and vowed that the interest of the shareholders and the public will be considered.

He added that the ruling was a big win for farmers, some of whom delivered their sugarcane to the factory and are yet to be paid.

Marima will start the leasing process afresh and given the high interest from investors, the factory will be revived quickly, especially if the process is done in a transparent manner.

Both bids for Mwale's Tumaz and Tumaz and Rai's West Kenya were higher than Sh25 billion.

Mumias creditors are owed more than Sh12 billion.

Mwale, said to be the largest private investor in Kakamega County through Mwale Medical and Technology City, said that his company will bid again in the fresh bidding process.

"The court made a well-argued and reasoned judgement,"  he said.

Justice Mabeya gave Marima 60 days to report the list of both secured and unsecured creditors and their amounts to court and then start the new leasing process.

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