Politicians are under fire to explain their earlier support of the ejected Ugandan firm Sarrai Group, which had the lowest bid of shs 5.8 billion for leasing Mumias Sugar Company.
Senior Counsel Paul Muite who is a leader for Safina Party, and who represented one of the aggrieved bidders West Kenya in court, said that the political leaders needed to explain why they supported Sarrai Group lease and yet they should have farmers interest at heart. "Political leaders also need to explain why they supported Sarrai " . Said Muite adding that, " the County Government ( of Kakamega) should have the farmers interest at heart".
The County Government had moved to Kakamega high court in January to stop Tumaz and Tumaz Enterprises, a firm associated with Mwale City investor Julius Mwale from interfering with Sarrai’s Mumias lease. Tumaz had offered shs 27.6 billion for the leasing for Mumias Sugar assets.
Tumaz and Tumaz , and West Kenya were enjoined as plaintiffs in the farmers case against the awarding of the lease to Sarrai Group. Other defentants in the case were PVR Rao who was the Mumias Sugar Company administrator, County Government of Kakamega, Attorney General, Competition Authority of Kenya and many others.
While ruling on the case on April 14th, Justice Alfred Mabeya of the high court in Nairobi revoked the lease award to Sarrai Group and removed Rao as the administrator for Mumias. The judge appointed Mr. Kereto Marima as the new administrator for Mumias Sugar Company and ordered Rao to hand over the company to Marima.
"This court has considered the allegations made against the leasing process .Rao awarded the lease to the lowest bidder while there were higher bidders, without giving any justifiable explanation," The judge ruled. He further noted that there were no other reasons given by Rao to explain why the other bids that were higher than that of Sarrai Group of shs 5.8 billion were disqualified.
"The manner in which Rao handled the leasing process did not tally with what was expected of him as an administrator," noted the judge. He said the lease was not in line with the best interest of the company and wondered why Rao refused to produce the lease in court. "The same (lease) was withheld from the court without any explanation. What did it contain that Rao did not want the court to see?" The judge asked.
Mr. Muite said he was surprised that KCB, a tier one bank which appointed Rao as its receiver manager , would have sanctioned the lease for about shs 6 billion. "The CEO and Rao owe the public an explanation as to why they sanctioned the lowest bidder for Mumias," Said Muite.
Muite noted that the new court appointed administrator will revive the company in a transparent manner, and that the interest of the shareholders and the public will be considered. He added that the ruling was a big win for farmers, some of whom delivered their sugarcane to the factory a long time ago and have not been paid.
The new administrator will start the leasing process afresh and given the high interest from investors, the factory will be revived quickily especially if the process is done in a transparent manner. Both bids for Mwale's Tumaz and Tumaz and Rai's West Kenya were higher than shs 25 billion. Mumias creditors are owed more than shs 12 billion.
Julius Mwale who is the largest private investor in Kakamega County through Mwale Medical and Technology City, said that his company will bid again in the fresh bidding process."The court made a well argued and reasoned judgement", said the tycoon .
The judge gave thenew administrator 60 days to report the list of both secured and unsecured creditors and their amounts to court and start the new leasing process.
