This archive report was first published on 6 January 2020.
January 22, 2018, marked the beginning of the end for Nakumatt, one of Kenya's most revered retailers. An audit report by Parker Randall Eastern Africa for the year ended February 2018 exposed a shocking truth: Nakumatt's top management had taken more than Sh. 1 billion in soft loans directly from the retailer.
These interest-free loans were taken despite the company's massive debts of around Sh. 20 billion owed to suppliers, banks, landlords, and employees. A report published in the Business Daily on January 2, 2018, showed that the amounts owed by insiders had dropped to Sh. 948 million as of February 2018.
According to the audit report, 'Significant in this net balance is Sh. 948 million due from the directors. These receivables are not supportable based on the available evidence.' The report also stated that the amounts due from a director were interest-free and related to short-term advances through a current account.
Nakumatt's founder and former CEO, Atul Shah, is among those suspected to have taken the loans. He is currently facing investigations over the loss of Sh. 18 billion worth of stock, which he wrote off in May 2018 before the company collapsed.
The Business Daily report further revealed that the loans to the company's directors were among a series of related party transactions amounting to Sh. 2.8 billion. These loans were declared unlikely to be recovered.
