This archive report was first published on 25 September 2019.
On September 25, 2019, KCB Bank Kenya took the drastic step of placing Mumias Sugar Company under receivership to safeguard its assets and maintain operations.
The move comes as the sugar company struggles to pay off its debts, with KCB Bank Kenya being owed Ksh 480.1 million. Other lenders, including Ecobank, Commercial Bank of Africa, and French investment fund Proparco, have also sent demand letters to Mumias seeking immediate payment.
Proparco is owed Ksh 9 billion, while Ecobank and Commercial Bank of Africa are owed Ksh 1.7 billion and Ksh 364 million, respectively. The National Treasury, which owns the majority share of the company, has bailed it out to the tune of Ksh 3.7 billion.
However, it has been alleged that the previous management under former CEO Errol Johnson misused the bailout money. The company has announced plans to conduct an audit to establish how the funds were utilised.
‘We have invited investigators to look into the Ksh3.2 billion that was given to the previous management under Errol,’ board chairman Kennedy Ngumbau told journalists at Mumias’ Booker Academy in December 2017.
The Kenya Revenue Authority is also demanding Ksh 10 billion in unpaid taxes, which have been outstanding since 2012. Kenya Power is also demanding nearly Ksh 1.2 billion in unpaid bills.
As a result of its financial struggles, Mumias’ losses in the year ending June 2018 rose to Ksh 15.1 billion from Ksh 6.8 billion in the previous period. The company is technically insolvent, with total assets standing at Ksh 15.7 billion against total liability of Ksh 21.6 billion.
