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Competition Authority of Kenya (CAK) which is the government regulator which approves mergers and acquisitions, has told the court that no merger approval has been submitted to them in relation to leasing the assets of Mumias Sugar to the Ugandan firm Sarrai Group, which they said is in violation of the Law.
CAK was responding to the lawsuit filed by five Mumias Sugar farmers :Lambert Ochochi, Augustino Saba, Prisca Ochacha, Robert Magero and Wycliffe Ng'ong'a against against the statutory manager, PV Rao (KCB's receiver manager), KCB, Attorney General Kihara Kariuki, the Agriculture Cabinet Secretary, the Competition Authority of Kenya (CAK), Sarrai Group Ltd, the Chief Land Registrar, the County Government of Kakamega, the Capital Markets Authority and Gakwamba Farmers' Cooperative.
" It is evident that Rao's decision to handover the assets of the company (Mumias) to Sarrai Group is blatant disregard and violation of the Law , and amounts to criminal conduct under Competition Act 2010", stated CAK in court papers in response to the case.
The farmers are challenging the lease award to Sarrai group, on the grounds that the lease was undertaken in an opaque manner and awarded to the lowest bidder Sarrai Group without regulatory approvals.
Milimani commercial court presiding Judge Justice Alfred Mabeya on Monday February 7th, 2022 said the matter must be determined expeditiously and consequently set the hearing from February 14th to 17th, 2022.
The Milimani high court judge Wilfrida Okwany on January 14th temporarily stopped the Uganda based firm , from proceeding with operations at Mumias Sugar for 10 days pending the hearing and determination of the case. She extended the orders at the January 25th, 2022 court hearing to March 14th, 2022 to allow new parties to be enjoined in the case.
The new parties included the bidders West Kenya Sugar limited represented by Senior Counsel Paul Muite, Tumaz and Tumaz Enterprises represented by Nelson Havi, and Mumias outgrowers company (Moco).
West Kenya Counsel Paul Muite had faulted the bidding process saying it was not conducted in a fair and transparent manner.
"The dispute should be determined expeditiously. It must be resolved once without much delay", Justice Mabeya said on Monday.
The Judge enjoined all the parties seeking to be part of the suit and directed them to file their papers within 3 days and the applicants to file their responses within 3 days.
When the case comes up for hearing on February 14th, the parties wil be highlighting submissions.
In response, Sarrai Group argued that the assets of Mumias are wasting away because of the orders stopping its operations.
On Tuesday February 8th, 2022 , in another case filed against Sarrai Group and Rao on December 29th, 2021, high court Justice Kenneth Ndung'u kept the earlier lease suspension orders in place and set the ruling of the case on March 3rd, 2022. In that Case, Tumaz and Tumaz Enterprises filed a case at the judicial review division of the high court , alleging that the bidding process was marred with "fraud, mistakes and illegalities".
Tumaz and Tumaz associated with Mwale City investor Julius Mwale also filed a contempt of Court case against Sarrai Group and Rao in January , claiming the defendants continued with work at Mumias last month despite the court orders stopping the work. Court papers showed Tumaz had emerged the highest bidder in the process with a bid of Kshs. 27.6 billion Vs. Sarrai group's Kshs. 11.5 billion.
Another Mumias Sugar creditor M/S Kimeto and Associates Advocates filed a case in high court last week before Justice Alfred Mabeya seeking to remove Rao as an administrator, and have the court order a new transparent tendering process controlled by the court.
Kimeto's lawfirm is owed Kshs. 76 million by Mumias Sugar and wanted the court to cancel Rao's lease award to Sarrai Group.
The lawfirm claimed that current lease wars are a precursor of Rao's failure to follow the law.
The lawfirm noted that from Statements filed by Rao in court in January 2022, he collected over Kshs. 1.4 billion from Mumias on behalf of KCB between June 29, 2020 and November 12th, 2021. They claimed the money is more than enough to have paid KCB's debt of Kshs. 525 million owed by Mumias Sugar.
