Judges put an end to Mumias' court drama to allow for revival

Cane farmers protest at Mwitoti on May 10, 2023. They urged President William Ruto to fulfil his promise to revive Mumias Sugar Company. [File, Standard]

If thespians and playwrights sat in Kenyan courts to script the story of the Mumias Sugar Company lease, perhaps it would be that high-octane drama soaked with edge-of-the-seat emotions and chilling suspense. 

The Court of Appeal would ultimately be a scene of its own, and perhaps be the pause of a story that started with the government’s idea for the revival of its sugar companies, an intense bidding process that culminated with Uganda-based miller Sarrai Group Ltd leasing Mumias, and a hitch that almost consumed Sarrai’s top managers. 

In that scene, judges’ recusal, letters flying to the Judicial Service Commission (JSC), and President William Ruto’s demand for withdrawal of cases that dogged the Mumias Sugar revivals would steal the show. 

The main cast in the scene would be on one hand, government-owned lender Kenya Commercial Bank (KCB), and Sarrai, while on the other, lawyer Jackline Kimeto of Kimeto and Associates Advocates, and senior lawyer John Khaminwa, would take the leading role. 

In 2019, KCB appointed Ramana Rao as Mumias Sugar's receiver manager. Mumias owed KCB more than Sh554 million in debt. 

Mr Rao then floated the tender for leasing Mumias, a process that culminated in Sarrai being picked as the preferred company to revive and run Mumias.

This is where the battles started. However, the better part of the court battles was a fight for judges to withdraw from the case. 

Fast forward to October 13, 2023, not only did Kimeto and Khaminwa lose their bid to have a second Court of Appeal Judge Bench composed of Justices Mohamed Warsame, Kathurima M’Inoti, and Dr Imaana Laibuta to withdraw, but they were also ordered to pay the cost for what judges observed to be a fanciful application for recusal. 

According to the trio, parties ought to bring cogent evidence for any judge to recuse themselves from a case. 

They said that some of the parties in the case had introduced allegations, insinuations and innuendos, including allegations of judicial bias, misconduct and outright corruption, which compelled a judge of the High Court and another Court of Appeal Bench to recuse themselves.  

“If judges in a collegiate court were to recuse themselves simply on account of the person who empanelled the Bench, such courts would never work. A judge would be wrong to recuse himself or herself on spurious grounds, just as he or she would be wrong to refuse to recuse in the face of real likelihood of bias that has been proved to the required threshold,” said the Bench headed by Justice Warsame. 

At the Court of Appeal, the twin applications filed by Sarrai and its directors first landed before Justice John Mativo on May 12, 2023.   

Justice Mativo certified the applications as urgent, paving the way for a fast-tracked hearing.  

At the heart of the applications was an order by High Court Judge Dora Chepkwony requiring Sarrai and its directors to explain why they ought not to be jailed for alleged contempt of court. 

Sarrai, its directors, KCB and Rao argued that the orders of the High Court to stop Mumias operations contradicted those of the Court of Appeal, and they (orders) had defied the hierarchy of courts. 

In April last year, High Court Judge Alfred Mabeya revoked the lease between Mumias and Sarrai.

At the same time, he ordered Rao to leave and appointed Kereto Mrima as the Mumias administrator. Aggrieved, Sarrai went to Justice Chepkwony and she suspended the implementation of Justice Mabeya’s orders.  

Rao challenged Mabeya’s orders before the Court of Appeal. On September 23, 2022, Justices Asike Makhandia, Jamilla Mohamed and Sankale Ole Kantai suspended them. 

In the meantime, at the High Court, Justice Mabeya withdrew from the case and the file landed before Justice Wilfrida Okwany, who directed that Sarrai should cease activities at Mumias. 

Thereafter, Kimeto asked Justice Chepkwony to jail Sarrai directors for alleged disobedience of court orders. It is this contempt application that landed before Justice Mativo.

After the case was certified as urgent, the file was placed before Justices Hellen Omondi, Ngenye Macharia and John Mativo. The trio however withdrew from the case. 

Mumias Sugar Company’s main entrance. [File, Standard]

The file was then placed before Justices Warsame, M’Inoti and Laibuta. Again, Dr Khaminwa and Kimeto urged the second Bench to also recuse itself.  

Khaminwa argued that since Justice Warsame was sitting in JSC, he should not sit in the case as there was a complaint against judges over Mumias Sugar before the commission. 

Kimeto expressed discontent with the entire Bench, arguing that it was empanelled by an acting president whom she had filed a complaint against before JSC. 

KCB, Sarrai and Rao opposed the application. Senior lawyer Githu Muigai, for Sarrai, and Mahat Somane, for KCB, said the application for recusal was a red herring intended to scare judges from sitting in the matter. 

Lawyer Muigai said his clients were unfairly being punished as they had started repairing Mumias Sugar's machinery and had planted sugarcane in preparation to have the operations run full throttle. Already, the court heard, Mumias had started contracting farmers with the cane for crushing. 

“With the resumption of operations, Mumias Sugar employed many Kenyans engaged in planting, harvesting, cane crushing and distribution value chain,” argued Muigai, adding that the commercial court had relied on falsehoods to find his client guilty. 

At the same time, the court heard that Mumias stoppage was hampering the government’s efforts to revive the sugar industry in a bid to lower the cost of living. 

The Justice Warsame Bench allowed the application. At the same time, they also allowed a separate application which sought to have Sarrai back in Mumias. 

Mumias Sugar was incorporated on June 29, 1971. It was then privatised through listing at the Nairobi Stock Exchange in 2001. 

According to court papers, the Treasury owns 20 per cent of the ailing miller while other State institutions have a 4.57 per cent stake. Individuals own the other 75.43 per cent. 

The miller’s financial troubles started in 2012. According to Treasury’s documents, by the end of 2017-2018, it registered a Sh39.44 billion loss after tax. In that year alone, it posted a net after-tax loss of Sh15.14 billion. The shareholding equity had eroded to negative Sh14.63 billion, exceeding its Sh628.24 million assets.