CMC moves to court over Jaguar deal cancellation

By Moses Michira

Troubled car dealer CMC links the pending termination of franchise arrangement with Jaguar Land Rover (JLR) to the shadowy overbilling deals that are estimated to have lost shareholders in the local firm billions of shillings in losses.

The listed auto dealer says that JLR was uncomfortable with the current management of CMC after recent investigations it sanctioned exposed the UK firm to have helped past director and management to defraud the motor seller through overbilling on supplies. 

Bill Lay, the managing director of CMC, claimed in a sworn affidavit filed in court that the strained relations have arisen from the implication of JLR in impropriety as revealed by findings of an audit sanctioned by the present management of the local firm.

“I also verily believe that the respondent (JLR) is displeased with the current management for setting in motion the events leading to the preparation of the report of forensic audit conducted by PWC and Webber Wentzel which attributed some of the monies stashed in the offshore accounts to commissions emanating from the respondent,” said Mr Lay in court filings.

Both PWC and Webber reports revealed that James Kiereini, the former chairman, and Martin Forster, the former managing director, were signatories to offshore accounts held in Jersey Island where commissions on cars bought by CMC were hidden.

Severe relations

JLR, according to Mr Lay, was paying the overbilled amounts received from CMC into the accounts, meaning it was knowingly abetting the theft of the company’s funds.

CMC has moved to court to contest the decision by JLR to terminate a 30-year-old exclusive distributorship contract, effective February next year, and the subsequent award of the same franchise to a local firm called RMA Group.

Mr Lay added that JLR had since the exposure of the financial impropriety intended to cancel the franchise with CMC, even as the car maker had threatened to terminate the deal over claims that the local dealer had not invested enough in showrooms and marketing.

“That from the foregoing background, it is clear that the termination of the 2nd applicant’s (CMC’s) distributorship was all along in the contemplation of the respondent,” he said.

JLR had earlier threatened to severe the relations with CMC on grounds that the latter’s showrooms did not meet its specifications, prompting the dealer to invest millions of shillings to improve its outlets.