Mumias Sugar management rows reveal plunder of miller

It has been years since a packet of Mumias Sugar has been seen consistently on shelves of retail outlets and new supermarket chains such as Carrefour have probably never stocked it.

Yet, just a few years ago, half of all sugar in the country was milled in Mumias, with the other 16 sugar millers sharing the remaining 50 per cent.

The company’s decline has been fascinating, its wrangles epic, having been led by four bosses in just three years - with little to show of for the billions pumped into the firm’s recovery.

As the company seems to sail rudderless towards its death, each of the bosses is leaving a paper trail exposing the conspiracy of politicians using the travails at the miller to siphon money from the State for personal gain.

Mumias Sugar listed on the Nairobi Securities Exchange in 2001, which would have freed it from political influence but mismanagement sent it begging to the Government for bailout loans with strings attached.

According to Kakamega Senator Cleophas Malala, the most recent changes at the helm of the ailing sugar miller, have all had political motivations.

“Those who are appointed as managing directors of the company are sacked after a short period of time for failing to dance to the tune of senior Government officials,” he said.

While politicians are known to fire from whatever barrel that gets them prime time attention, Australian boss Errol Johnson, who quit in 2017, voiced similar concerns when he was asked to pay a fee to access the Sh3 billion State bailout cash.

Mr Johnson fled the country fearing for his life and penned a tell-all letter painting the miller as a cash cow for politicians even as disillusioned farmers watch the institution rust and crumble.

Fast forward today and three other bosses have sat in Mumias Sugar hot seat, each with a tale of the skeletons in the company’s closet.

Errol was replaced by Nashon Aseka who ran the company for a year before Patrick Chebosi, former agriculture manager and head of Kwale Sugar Industries, took charge in June 2018.

Seven months later, Mr Chebosi has now been sent on leave in what is widely seen as another succession battle, and replaced by the chairman of Sukari Sacco, Isaac Sheunda.

The board also appointed Dalmas Wala as risk management officer in acting capacity.

Doubtful transactions

Officially, Mr Aseka was suspended by the firm’s board of directors for allegedly entering into some doubtful transactions without following due process and requisite approvals.

However, according to Senator Malala, the recent overhaul dates back to Aseka’s exit over a Sh15 billion scam during the grab-and-run sugar importation scandal under the subsidy programme.

Malala, who spoke on Thursday at Nabongo Cultural Centre when he met over 500 sugarcane farmers in Mumias town, claimed Treasury offered the miller Sh15 billion and a licence to import cheap sugar from Brazil so that hey could repackage and then sell to get profit to revive the company.

“Going by the sugar shortage in the country, Mumias was to sell repackaged sugar at $800 (Sh80,000) per tonne. Mumias Sugar would have made a profit of $650 (Sh65,000) per tonne which was to be used for the revival of the company,” he said.

Instead, the senator alleges that a senior politician hijacked the process and set up a deal that would divert the windfall to private pockets. Mumias would only act as a conduit.

In the scheme, Mumias would buy the sugar at $650 instead of $150 with the $500 going into private pockets.

“The board of management ordered the then CEO Nashon Aseka to and take the money from the Treasury to import sugar from Brazil but with the new orders, and he declined. They were ordered to suspend him and later sacked him for ‘blocking business’,” said the senator.

He said Aseka had informed the board that if the sugar was to get to Kenya after three months, the market prices would have reduced and thus the company would have ended up making huge losses again.

Besides the political problems, Mumias is facing extinction as rival firms cannibalise its base of raw materials.

Billionaire Jaswant Rai, through his three millers - West Kenya, Sukari Industries and Olepito Sugar Company - now controls over a third of the sugar produced locally.

Busia Sugar also opened its doors this year which will further deny the old miller a share of independent growers frustrated with Mumias legacy debts.

“The structural collapse of the regulated sugar industry, the full effects which are yet to hit home, have opened up Mumias Sugar lands to other millers. This effect will be long felt as the instability in the industry has led to a dramatic decline in cane development, while milling capacity remains at double the available cane,” Johnson had said.

The miller has lost considerable area under cane as dejected farmers turn to other crops and can barely get cane to crush. Over 76,000 farmers having uprooted their cane and ventured into other business with only 20,000 farmers currently said to be engaged.

Mumias Sugar owes cane farmers at least Sh700 million in unpaid cane deliveries and other creditors over Sh20 billion.

The miller has not published its annual results which have delayed for almost four months and has even opting to sell off Sh10 million worth of scrap metal and timber from its forest plantation to enable it resume operations.

A drastic step is being made to save the ailing company with 900 workers said to be facing the axe next month after a job audit.

The company’s board chairman Kennedy Ngumbau said under Mr Sheunda,  Mumias Sugar will hopefully be able to start milling in February and have contracted private farmers who can sustain capacity for six months while cane development is underway.

“My focus will be to restart the factory by February this year. We want to start crushing which is our core business,” he said.

“In the past years we had done wrong things by taking our farmers for granted. Farmers’ payments will be a top priority for me than anything else. Employees will be getting their pay after farmers have been paid,” said Sheunda.

This will be a long shot given Malala is pushing for a board overhaul while Chebosi’s leave hangs uncertainly over the company’s future.

“We want the entire board relieved off their duties by President Uhuru Kenyatta for working with outside forces to scuttle Government plans to revive the factory,” Malala said.

Chebosi has also maintained he will be back at the miller when his leave expires, setting the stage for further wrangles.

“I was not told why I was being asked to take leave but I complied with the request of the board and that is why I am at home waiting for the lapse of the period,” he said.

The new management will also have to navigate the perils of firing its workers and ensure the giant miller is back on its knees.

The miller has more than 1,500 workers and will trim the excess at a cost of Sh400 million as it moves to tame a huge wage bill estimated at Sh40 million a month.