First firm withdraws from Mumias Sugar case

Mumias Sugar Company receiver manager, Ponangipalli Venkata Ramana Rao during a press conference at the company's boardroom on March 4, 2020. [Nathan Ochunge, Standard]

One of the parties challenging Mumias Sugar Company lease to Uganda-based Sarrai Group and the appointment of Ramana Rao as the miller’s receiver manager has thrown in the towel.

Vartox Resources Inc, based in Dubai, filed a notice in the Court of Appeal indicating that it was dropping its application opposing the appeal filed by Sarrai, Kenya Commercial Bank, and Rao.

“Take notice that Vartox Resources Inc, the third respondent in these proceedings hereby wholly withdraws its application dated December 25, 2022,” the notice filed by Vartox’s lawyers, Anjarwalla and Khanna LLP read in part.

Vartox's involvement in Mumias lease battle was central to Victoria Commercial Bank (VCB) CEO Yogesh Pattni appearing before the Directorate of Criminal Investigations (DCI), and sleuths seeking to investigate the lender’s shillings and dollars accounts.

At the same time, it was the reason why DCI initially took West Kenya Sugar Company chairman Jaswant Rai from Jomo Kenyatta International Airport for questioning.

The DCI had filed a case seeking a warrant to investigate Victoria Bank in June this year. The application filed before the Milimani magistrate’s court indicated that the detective's interest with the lender revolved around alleged money laundering as well as conspiracy to defraud, and fraud in relation to tax.

They said that the probe had been  reported to Treasury Cabinet Secretary Njuguna Ndung’u.

Inspector Isaac Ogutu from DCI told the court that preliminary investigations had shown that unnamed people had conspired to defraud Mumias Sugar Company with the aim of sabotaging its revival and operation.

The investigator also alleged that the transactions could be fictitious and that they took place in actual books of accounts of the bank.

The DCI on June 23, 2023, obtained orders allowing them to probe the bank accounts belonging to Vartox Resources Inc. (Vartox Resources Kenya Limited) from January 1, 2019.

However, Pattni moved to the Commercial Court arguing that the DCI was conducting a sham probe since the accounts listed in the order of the lower court do not belong to Vartox.

In his affidavit, Pattni said that he honoured the invite by the DCI and appeared before its investigators on June 21.

“During the interview session, the DCI informed me that they were investigating unspecified fraud against Mumias together with evasion of unspecified taxes and unspecified money laundering allegations,” said Pattni.

He said that they did not get any details about the probe or explanation on how the bank had broken the law.

According to court documents, Ogutu in his affidavit also claimed that Victoria Bank bought rights and benefits in Mumias Sugar Company Limited from a company called Propraco, which had allegedly lent the sugar company $35 million.

According to Ogutu, Victoria Bank later sold the benefits to Vartox Resources Inc. (Vartox Resources Kenya Limited).

He said that Vartox, which allegedly gave the $35 million loan, is not registered in Kenya.

However, Pattni said the DCI never attached any document in their application before court.

According to the Victoria Bank CEO, the DCI did not reveal how the sought information on the bank accounts would aid their investigation or give particulars on how the bank financed a criminal activity.

He said that the application by DCI to access the financial information of the accounts belonging to Vartox was a gross abuse of the legal process since they had no evidence.

Pattni accused the DCI of deliberately concocting facts, adding that the claim that the bank purchased shares in Mumias is false.

“I am aware that the only thing purchased by Victoria from Proparco is the debt it advanced to Mumias for the construction of the co-generation plant many years ago and well before Mumias became subject to insolvency proceedings,” he said.

Propraco is a French government-leading institution that has been lending to Kenyan and African companies for years.

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