This archive report was first published on 19 June 2020.
State Intervenes in Tuskys Debt Crisis ¶
June 19, 2020
The Competition Authority of Kenya (CAK) has taken unprecedented steps to intervene in the debt crisis of Tuskys, a major supermarket chain in Kenya.
According to a letter seen by the Business Daily, CAK has ordered Tuskys to obtain written concurrence from the authority before expanding its operations, including opening new branches or starting new lines of business.
The regulator has also prohibited Tuskys from declaring or paying bonuses, fees, or other discretionary compensation to its directors, who are mostly relatives in the family-owned retail chain.
CAK's move is aimed at preserving cash to pay Tuskys' suppliers, who are owed Sh1.2 billion. The regulator has given the company until July 16 to settle all its supplier debts.
CAK's Director-General, Wang'ombe Kariuki, said the authority has issued prudential and reporting orders to Tuskys, which has failed to present a payment plan or evidence of negotiations with affected suppliers.
The regulator's actions mark a significant shift in its approach to dealing with struggling retailers, which has previously been confined to the banking sector.
CAK's intervention in Tuskys' affairs is a response to the retailer's failure to pay suppliers on time, which has resulted in cash flow challenges for suppliers and consumers missing essential goods on the retailer's shelves.
The regulator's investigation into Tuskys' operations will include a review of its audited financial statements and those of its subsidiaries for the last three years, as well as its management accounts for the last six months.
