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Citizen Weekly

Sunday, 7 September 2014

MUMIAS FORENSIC REPORT LINK DIRECTOR TO SH100M DUBIOUS PAY



Mumias Sugar board of directors under Dan Wameyo is a worried lot. It moved to suspend several managers at the company over what they termed sabotage and impropriety.
The 27 followed Peter Kebati the chief executive officer and Paul Murgor of marketing who were sent home. The recent casualities among others are agriculture and engineering manager a one Nyagah, Julius Were and a son of former director Osundwa.
In what is seen by farmers as “addressing the symptoms and not the disease, the board argued that these individuals had also not proved their capability in steering the company into profitability soon as promised at the AGM.
Farmers want the root cause of the troubles addressed including the dissolving of the entire board which is accussed of foiling to make the forencic audit report public since it has implicated many of them. One director James Chege is said to have been paid a cool Sh100 million to supply fridges for Mumias Springles Water to be distributed to various outlets. Suprisingly his firm imported only 200 of them and pocketed the rest. 
At the meeting held at Tom Mboya Labour College in Kisumu months back. The acrimony, the drama and the noise raised by genuine farmers and hired hoodlums has refused to died down. Away from the sugar-coated lies by the management and the sweet promises of the political leaders present and the board of directors, the books of  account of this company state a different case. The company is headed in the abyss.
It does not need an accountant or any other financial expert to realize that the picture painted by MSCs annual reports and financial statements of 2013 is grim because the company stands at a Sh10b risk exposure.
Without declaring how they intend to mitigate the risks, Mumias Sugar Company’s audited accounts are a “true reflection of the state of affairs at Kenya’s premier sugar miller”.
Page 83 of the financial statements shows that the once glittering firm borrowed Sh5billion to finance electricity generation, water and ethanol plants and the new office block. This was several years ago and the projects are even yet to rake in the much anticipated proceeds.
Mumias Sugar, the accounts show, owes trade suppliers Sh3billion money borrowed to run their day-to-day activities as they anticipated to supply sugar to the traders. This has come a cropper. Sugarcane has been uprooted and the crushing capacity has sunk.
The banks are also on the neck of the company as overdrafts stand at Sh1billion due to borrowing to settle debts and pay farmers who in turn are also owed Sh700million in unpaid dues.
The government through the Agriculture ministry lent the company Sh500million to pay farmers but this cash is a drop in the ocean as it failed to meet the target.
This money, deposited in a separate account is said to have been eaten partly by three board members namely Chege, Francis Kipkoech and Nimrode Namenge. Over Sh1million distributed to spies based in Mumias to buy their silence on the future prospects of the company.
The company boards of directors and the management have for long now failed to heed the warning shots by their auditors year in year out. The reason, they are involved in multi-million shillings scam.
With net revenue of Sh12 billion and a pre-tax loss of Sh2.2 billion, MSC is on record that its expenditure was Sh14 billion. This is a company whose management is living beyond their means, care free and little regard for the farmers.
Shameless individuals are eating into the company, they are driving the company to its edge as stakeholders including politicians and the government addresses the symptoms with no seriousness in seeing that it stands.
It is said Kebati, who worked  as the financial director and then CEO was afraid to raise the red flag that the company faces imminent collapse because he could be held accountable. Mumias owes Kebati Sh100million which he is demanding.
Funny enough it is under his tenure in finance department that the company over committed itself in mindless projects, he failed to advise board of directorss on the long term effects of the cash cows.
It is on these grounds the Ameyo board has held  him accountable.
The forencic audit report shows the purchase of sugar, molasses and supply of electricity and importation of sugar was fishy. It was in total contravention of the company policy in dealing with banking institutions. To complicate matters is the deals with a Sudan sugar firm and importation and repackaging of sugar in Mumias branded packages with a section in management involved.
As this is happening, Mumias Sugar board of directors is pushing Coutts Otollo for a three years old contract in office so as to protect them from being exposed. Otollo before being named in the current position was a director on board.
The finance department and the legal one-headed which was headed by axed Emilly Otieno according to the report were engaged in dubious payments. Proniment law firms are said to have invoiced and paid for services not offered.
A secret account running into billions was created to deal with the Sudan Kagera sugar firm by finance department to hide suspect dealings.