Bank seeks to wind up Mumias over Sh93m debt

Kenya: A bank has moved to court seeking orders to wind up Mumias Sugar Company over a debt of Sh93 million.

The company could be even in more trouble as MPs threatened to slap it with a Sh1 billion bill over unpaid taxes relating to fake sugar exports over the past years. The exports claimed by the firm never left the country.

Acting Managing Director Coutts Otolo told MPs that the undisclosed lender who wanted the company wound up over an outstanding debt is linked to a scandalous importation of 10,000MT of sugar from Kenana in Sudan last year.

Otolo's revelation is telling of how badly the country's biggest sugar miller is fairing as it plunges further into losses over mismanagement. "We have received a winding up notice by a bank over claims worth Sh93 million," Mr Otolo told MPs yesterday.

Trouble with the sugar import started early last year when Mumias irregularly contracted a third party to bring in 10,000MT from Sudan. Even though the miller was licensed to import sugar, there were no provisions to subcontract a third party – which the MPs now fear could be linked to some members of the board of directors or senior management.

A forensic audit commissioned by the company had unearthed massive irregularities on how the transaction was executed and the amounts lost. The unnamed third party received Sh460 million on behalf of Mumias from its customers, but never submitted the amount to Kenana who had already delivered the commodity.

Mumias was forced to pay for the sugar, in a transaction that could have cost the firm billions. The MPs accused Otolo of withholding information from the committee after he failed to respond to nearly all the questions raised.