Kenyan retailer Tuskys under investigations over US$12.1m unsettled debt

KENYA – Kenyan supermarket chain Tusker Mattresses Limited commonly refered to as Tuskys is under probe over default of suppliers pay to the tune of sh.1.29 billion (US$12.1m) with the Competition Authority of Kenya (CAK) launching an investigation over the retailer’s bank accounts.

Tuskys has been ordered to furnish the regulator with its monthly bank statements for the past one year for all bank accounts relating to its retail business by Friday this week, reports Business Daily.

ADVERT

Documents seen by the local daily show that this is part of a wide-ranging investigation into one of the country’s largest supermarket operators, which has lost the trust of the regulator and suppliers.

The CAK started looking into Tuskys operations in April after reports emerged that it was not paying suppliers on time as provided for in their respective contracts.

The manufacturers wrote to the Ministry of Industrialisation and Trade and the Competition Authority of Kenya (CAK) calling for speedy resolution of the debt impasse.

This was followed by the competition watchdog ordering Tuskys to settle the Sh1.29 billion (US$12.1m) by between July 1 and July 16.

The reports have indicated that Tuskys’ executives risk a jail term of five years or a fine of up to Sh10 million (US$94,000) or both if they fail to settle the debt or furnish CAK with bank statements, audited accounts, list of suppliers and their contracts.

“Any person who fails to comply with the order of the authority commits an offence,” said CAK in a letter to the retailer. “This matter remains under investigations and further orders will be issued as and when merited”.

The retailer on May 15, told the regulator that it owed suppliers a total of Sh884.3 million (US$8.3m). It subsequently wrote to CAK on June 12, revising down the outstanding sums without proof of payments and concurrency by suppliers.

ADVERT

However, the regulator established through independent investigations that the retailer had failed to disclose another Sh400.9 million (US$3.7m) owed to suppliers.

“With this background and our investigations, the Authority has established that Tusker Mattresses Limited is experiencing incidences of abuse of buyer power in the form of delays in payment of suppliers contrary to sections 24A(1) and 24A(5)(a) of the Act,” CAK wrote in a letter to the retailer.

CAK now wants Tuskys to focus on settling its current obligations and prioritise the interests of suppliers ahead of other parties such as shareholders and employees.

In regards to this the retailer will now need approval from the Competition Authority before it can pay bonuses to directors, open more branches or start new lines of business.

While Tuskys has blamed its woes on the Covid-19 pandemic, a substantial part of the debt predates the pandemic, which was first confirmed in the country on March 12.

Tuskys becomes the first major retailer to face the scrutiny of CAK’s Buyer Power Department, which was created after Nakumatt Holdings collapsed with Sh30 billion (US$282m) owed to suppliers.

Besides bank accounts, the investigations into Tuskys’ affairs will include a review of its audited financial statements and those of its subsidiaries for the last three years.

The company has also been asked to provide the regulator with its management accounts for the last six months.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.