On 22 November 2018, the Central Bank of Kenya was drawn into the Karuturi flower farm dispute after workers demanded answers over CFC Stanbic Bank’s role in the Naivasha-based company’s collapse, receivership and mass layoffs.
The petition, copied to the National Treasury, the Ethics and Anti-Corruption Commission and the Kenya Plantation and Agricultural Workers Union, asked regulators to examine the bank and its receiver managers over alleged financial wrongdoing. The workers said the farm had been pushed into receivership after a loan arrangement that began in 2012 was altered without explanation.
According to the letter signed by Allan Owaro on behalf of more than 2,500 workers, the bank had agreed to advance $6 million (Sh600 million) in phases but only released $4 million (Sh400 million). The workers claimed that CFC then recalled the facility and placed the farm under receivership even after the company had paid 10 per cent of the loan as a sign of goodwill and willingness to repay.
Owaro said the receiver managers later stayed in the company for close to two years, during which the farm’s assets deteriorated, production fell and sales dropped sharply. He also said Karuturi shareholders had tried to negotiate a settlement and even brought in investors ready to clear the debt, but the bank declined to engage them.
The workers further alleged that the company contested the matter in court while the bank moved to auction Karuturi’s assets. They said employees were paid late during the receivership and were eventually left jobless without compensation.
In the same letter, the workers asked the CBK to investigate who approved what they called a costly recovery exercise, saying the bank spent $16 million to recover a $4 million loan. The petition was signed by Bank Supervision Manager Reuben Chere.
The dispute came as former workers continued to press for unpaid dues, with some saying the farm had already been closed and its machinery either sold or stolen. Two weeks before the report, workers had invaded the farm and subdivided it for farming so they could support their families.
One captioned image in the source described former Karuturi workers protesting outside the closed institution and demanding dues totaling more than Sh200 million, after more than 2,500 employees were laid off when the Naivasha farm was placed under receivership over debt owed to CFC Bank.
