Mumias Sugar: Once thriving giant that became victim of its success and history

Poor, illiterate farmers were duped into surrendering their share certificates for a song to people from Nairobi, receiving only one shilling for a share worth Sh60 -- this was only the beginning

Nothing represented the good times for Mumias Sugar Company more than it’s football team.

Their stadium at Mumias Complex was one of the best in the country. The grounds were impeccable. The grounds men were always well groomed on match day.

Indeed, the 25-man football team was the envy of their peers. In 1996, the team won the Moi Golden Cup. Three years later, they did it again. But for a club that earned promotion to the premier league in 1985, the most coveted of prizes still eluded them. But not for long.

The team was the pride of the region. Every Thursday as the players hit the hills of Sabatia with their famous green bus behind them, children ran beside them, chanting names of the star footballers. Abiud, Alemba, Lumbasi, Kimuyu, Okumu.

These players represented the dreams and ambitions of the region. Every time they kicked a ball, a little light went on in the hearts and minds of the children.

The power the team had over the people though came without the much-coveted title of premier league champions. On November 28, 1999 it looked like the curse was broken. On the final day of the season, they needed a seven-goal clear margin against Kisumu All Stars to stand a chance of lifting the trophy. The Mumias Sugar team turned up, blasting 10 goals past a hapless All Stars team.

That evening as the sun set behind the vast sugar cane fields around the stadium, Mumias town was buzzing.

Bicycles, matatus and private vehicles on the main Mumias-Kakamega highway moved at whatever pace was dictated by the football fans. They were champions at last.

The euphoria was to last just a week.

An inquiry into the match a few days later revealed that officials from Mumias Football Club had bribed their way to the title. Speaking to match investigators, an All Stars official confessed that the team’s players and officials received Sh15,000 before the match, a further Sh15,000 at half time and Sh10,000 after the final whistle from Mumias officials to throw away the match.

This might have been the first time that the power that Mumias enjoyed parted ways with the responsibility bestowed on its shoulders.

Year later, it happened again. This time, the consequences of rubbing of the rules of engagement were far much graver than a fine and a docking-off of points. The consequences for the second transgression ran deeper than the threat of a ban from the Kenya Premier League.

This time the livelihoods of some 66,000 farmers were subjected to an audacious gamble by people entrusted to look after their interest and in what seems a deliberate attempt at swindling funds from the giant company into the pockets of a few individuals.

Many of those we spoke to say the trouble with the miller started in 2004, when Mumias Sugar Company unknowingly became a victim of its own success.

“It became too big,” Gamaliel Anamanjia says. “Too big that those who came in never thought it could one day fall.”

Biggest mistake

Their actions, Anamanjia who worked in senior management at the company for close to three decades says, showed they had little regard for what had kept Mumias afloat for years. For him, the biggest mistake the new management team installed in the company in 2004 made was to mistreat the farmers.

“We forgot that the engine driving this thing called Mumias was the small holder farmers,” he says.

“After privitisation, the new management ensured that farmers shareholding that had been capped at 30 per cent was not held as a collective but was broken down and shared to individual farmers,” Simon Wesechere of the Mumias Sugar Cane Farmers Association says.

“At the time, the farmers did not know what privatisation even meant. After a few months, they were told to go collect their share certificates. Most of them ended up framing the certificates and hanging them up in walls nest to treasured family portraits,” Wesechere says. “The farmers didn’t know what they held in their hands.”

Then a sort of invasion happened.

“People came from Nairobi and asked to see the piece of paper I got from Mumias,” Cromwell Mwimani says. The 81-year-old is one of those who had collected his share certificate.

“They gave me Sh10,000 and went away with my certificate. My neighbour was given Sh5,000,” he says.

At the time, the company shares were trading at an average Sh60. They sold off theirs for an equivalent of just over one shilling.

Mwimani is just one among the many who unknowingly gave away a piece of himself. Currently, just over seven per cent of the original 30 per cent held by farmers is still in their hands. The rest was bought off in years following the company’s privatisation.

Many farmers never collected their share certificates and to date, some Sh200 million in unclaimed Mumias shares are held by the state.

Anamanjia thinks this was deliberate and says the only way a new management team could have its way with the company was by making sure farmers did not have a united voice. First, by destroying the Mumias Outgrowers Company fondly referred to as Moco by farmers.

Moco was formed primarily to champion interest of the farmers by coalescing them into one large group to prevent the company’s management from exploiting them since it would be in the company’s best interest to get cane at the lowest possible price. Moco was meant to prevent this.

As a result, an agreement was drawn by the Attorney General’s Office in 1976 to establish Moco on terms agreeable to both Moco and MSC.

“The mistake they made was to put all funds meant for Moco under the management of Mumias Sugar Company. Mumias was to manage and keep records,” Anamanjia says.

Moco had been charged with research into cane farming, providing farm implements to farmers at affordable rates and taking care of the grower’s needs, freeing up time for the main company to concentrate on milling.

“They decided to kill Moco. However, in the process of killing it they killed themselves. The outgrowers were the engine. It was the face of indigenisation on Mumias sugar,” Anamanjia says.

The crucifixion of Moco was not a labour of love. By 2004, Moco had some Sh3.5 billion in its cane development kitty. Moco’s death would wrest the control of billions solely in the hands of the company’s management.

Mumias Sugar Company, mandated by the 1976 document, managed this kitty and paid out interest earned from this money out to Moco every month for use by farmers.

“We could get advances from Moco to deal with our immediate needs as we waited for the company to pay us for our harvests,” Mwimani says.

It has been five years since he planted a new cane crop. His 20-acre farm cannot however forget the crop that educated his children. Across the fields where cows now roam free, tufts of the cash crop still fight for in territory taken over by wild grass.

As far as the farmers and Moco were concerned, the Sh3.5 billion kitty was their Plan B. If ever anything were to go wrong with the company, they would hastily retreat to this amount and jump-start themselves. After all, there was no reason to be uneasy. Mumias, the company managing their money was doing well, declaring profits on successive years.

For instance in mid-2009, Moco approached the Kenya Sugar Board for a loan to purchase tractors for members. In a letter of undertaking by Mumias Sugar Company to KSB, the then CEO Evans Kidero acknowledges that the company held Moco’s money in trust and that from it, it disbursed an average of Sh15 million each month to the out grower society.

A year later though, these interest payments to Moco stopped after queries into the account operated by Mumias started.

Negative returns

Independent audits found irregularities in the manner in which the account was run. Key among the findings was that the account with the Moco funds had been overdrawn by the management of MSC and now, unknowingly, farmers were indebted to various entities to a tune of some Sh725 million. They were in debt, and had no money for the development of sugar.

Secondly, MSC started charging Moco interest on a loan they never took.

This money was recovered directly from farmers through punitive transportation costs of fertiliser, seed cane and transportation. Cane farming became too expensive for farmers, with many of them, after the harvest of their produce receiving negative statements from the miller.

“A farmer would plant the cane, look after it, harvest it, send it to the miller and yet still be indebted to Mumias Sugar Company,” Mwimani says. “This made many of us abandon the crop.”

There is no evidence the money recovered from the farmers over this debt was banked. “There was no paper trail of the servicing of this so-called debt,” a current manager with the miller told Sunday Standard. “The farmers were to never know when they would finish paying the debt.”

The company’s official books between 2006 and 2009 that showed high profitability listed claims worth some Sh2.6 billion as having been recovered from Moco.

“In May 2008 we wrote to the Ethics and Anti-Corruption Commission (EACC) to investigate what we saw as blatant corruption at MSC,” Anamanjia, the current Moco CEO, says.

On June 9, 2008 Mumias Sugar Company officially resigned as directors of Moco and a month later stopped sending the interests accrued to Moco.

The curious case of the missing Sh3.5 billion remains unresolved. With claims and counter claims filed in court by the two organisations whose survival is ultimately linked.

“The government appointed people with no grounding on sugar matters to lead the company. They came into something they never knew. How then did we expect them to make decisions from a point of knowledge,” another manager at the company now under receivership says.

“Those who were in charge came with the purpose of pleasing the shareholder with high profitability at the expense of the farmer. Some of the costs he passed on to the farmer were exorbitant.”

As a result of this multi-billion shilling impasse, the company has not developed cane for its use since 2012. With no cane, no farmers and no money, the company collapsed and is now under receivership.

The famous green and yellow home colours of the football team no longer evoke a sense of belonging among people. Instead, where pride once lay only nostalgia remains. Nostalgia alone, though, is not enough to get turbines of the sugar miller up and running.