Mixed reactions as KCB takes over Mumias Sugar over Sh20 billion debt

Activist Bonface Mander and fellow activists address media after they asked Rao Consultants to leave the company. [Duncan Ocholla, Standard]

There was drama at the cash-strapped Mumias Sugar Company on Tuesday evening after a receiver-manager took over management of the ailing miller.

The move by Kenya Commercial Bank to put the firm under receivership was opposed by Senator Cleophas Malala, angry local residents and lobby groups based in the area.

Ponangipalli Venkata Ramana Rao, who KCB appointed as the receiver-manager on September 20, arrived at the company premises around 3.30 pm escorted by police officers from Mumias Police Station ready to take control of the struggling factory.

Mr Rao had earlier replaced private security guards manning the company premises and the main gate with his own security team with firm instructions that no one should enter the premises.

Mumias Sugar private security guards were ordered to leave the premises and go home. The company staff were also declared redundant.

Appointment notice

Rao then went to the administration block and issued managers with his notice of appointment from KCB.

“Pursuant to powers conferred to us by KCB debentures and the law, we hereby appoint Ponangipalli Venkata Ramana Rao of Tact Consultancy Services to be the receiver and manager of property and assets of Mumias Sugar Company,” read part of the letter.

Rao then gave them a second letter he authored dated September 24 with instructions on what the current management should undertake in the next 14 days.

“You are required to submit a statement of the company’s affairs within 14 days from the date of you being notified about the appointment of the receiver, failure to which is punishable in law,” Mr Rao’s letter read.

Part of the information that was being sought by the receiver-manager includes a list of movable and immovable assets, list of trade and other creditors and their respective addresses and securities.

“Specify details of any dues to the Kenya Power and Lighting Company, Kenya Revenue Authority, list of all bank accounts with balances, particulars of insurance cover currently available, copies of any valuation reports and technical assessment reports, original title deeds of the company properties and original log books of company vehicles,” the letter further read.

As the company management led by Human Resource Manager John Shiundu took Rao and his team around the factory at around 4.30 pm, Mr Malala stormed the miller, joined by activists and locals, to ‘reclaim’ the factory.

Malala asked the receiver-manager why he was taking over the miller without involving local leadership.

“You can’t come around and say you are the owner of the company. We must have a meeting as stakeholders, the board the management and the leadership of Kakamega County and discuss the way forward on reviving the company,” Malala told the receiver-manager.

Malala argued that the national government should come clean on what its intentions and plans were on the revival of the company, noting it was frustrating efforts shown by Kakamega County leaders to have the miller up and running.

The senator asked President Uhuru Kenyatta to consider writing off debts the miller had incurred over years and stop the receiver-manager from taking over the management of the company.

He also called for the release of a sugar task force report chaired by Agriculture Cabinet Secretary Mwangi Kiunjuri and his co-chair Governor Oparanya.

Last month, KRA also demanded Sh10 billion not remitted by the miller.

Boniface Manda, the chairman for the Bunge la Haki Usawa na Maendeleo, who had mobilised local farmers to the factory, vowed to camp outside the miller’s gates and lockout any receiver from taking over.

“We want our miller revived and end up in good hands rather than few individuals who have no interest in growing our company,” said Manda.

Later, human resource manager said the legal department had ascertained the authenticity of the document from the receivers.

Mr Shiundu said he was instructed by the legal team to adhere to the notice and show the receiver around the factory to access assets and how the operations were being carried out. The miller that has been surviving on ethanol processing was forced to stop operations when the receiver arrived.