Mumias board defends itself against fraud claims, blames management

KENYA – The Mumias Sugar Company board of directors have said the management kept them in the dark over the alleged fraudulent dealings that pushed the miller to the brink of financial ruin.

KENYA – The Mumias Sugar Company board of directors have said the management kept them in the dark over the alleged fraudulent dealings that pushed the miller to the brink of financial ruin.

Mumias Chairperson Dan Ameyo said he was given the job when Mumias was going through its worst patch, dragged down by what he termed the “worst possible management”.

ADVERT

But Nairobi Governor Evans Kidero, a former managing director of the company, trashed the allegations made against him in the report by KPMG as baseless and failing to “meet the basic threshold” required in an audit report.

“At no time did the board, auditors or shareholders suggest that anything outward was happening in the company. Allegations of malfeasance, mismanagement or theft must solidly consider this reality,” said Dr Kidero.

Kidero said when he left Mumias in 2012, it had made a net profit of Sh2.6 billion and the net cash position was Sh650 million and suggested focus for now should be on what really ails the company.

Ameyo, who was once postmaster general, was formally appointed Mumias chairperson in December 2013, but had before served on the board as a director for at least six months.

“I came in to try and turn the company around but was not sure how bad the mess was,” the advocate and legal consultant on trade and integration law told The Standard.

Ameyo’s predecessor, John Bosse equates the mess to World War II, citing that with the benefit of hindsight, his board should have done more.

“The board of directors is not involved in the day-to-day running of the company, but looking back, I feel that more should have come from us,” said Mr Bosse, who was chairman when most of the mismanagement took place.

A forensic investigation by audit firm KPMG, which Ameyo claims to have sanctioned as board chairperson, revealed weaknesses in management that cut across procurement, commercial and a botched sugar importation.

But in its wake, the findings point to a major structural weakness in the board whose role it was to provide oversight and strategy for the company.

Ameyo’s board of directors has repeatedly claimed the managing director deliberately allowed his team to run down the company through “every possible way”.

He accused suspended Mumias CEO Peter Kebati of abusing the trust bestowed on him and misleading the board. Mr Kebati declined our request to have his rebuttal of the accusations. Ameyo said the board had reviewed the findings of the audit, and acted on them.

“We have charged them in court. It is not humanly possible for the board to know every single thing happening in a company,” he said.

Frustrated auditors

Ameyo argued the rot started way before he became a board member, and that he could only comment on events during his tenure as chairperson.

He could also not explain the procedure used to select Coutts Otolo to replace Kebati. Mr Otolo had been a director for several years. “I can’t comment on that,” Ameyo said.

Some of the sacked managers at Mumias and a parliamentary committee have dismissed the claims. “Mumias’ board refused to give us the report despite repeated requests, and now we can see it is because they know they had been implicated. We were, however, able to exercise our power to demand it from KPMG,” Noor Mohamed, the chairman of the Agriculture Committee of the National Assembly and MP for Mandera North, said.

“Do not forget that the public interest in the company is huge and public money was spent to compile this report,” he said.

Ameyo had earlier said his board was not obligated to share the forensic audit with Parliament because it is the board that has commissioned its compilation.

“In any case it is still a draft,” Ameyo had said. But, KPMG had expressly noted the board had “frustrated its work, by refusing to respond to its request for information”.

Paul Murgor, the former commercial director, said the senior managers at his level only acted on policy directions passed down from the board via Kebati.

“The board is trying the easier way out after making decisions that have ravaged the company,” Murgor said. The only outsider extensively mentioned in the report is flamboyant businessman Benson Ndeta, the face behind Savannah Cement.

The eight are part of a list of 20 persons of interest highlighted in a 338-page exposé as having had a hand in the near-collapse of the sugar miller.

February 18, 2014; http://www.standardmedia.co.ke/business/article/2000151927/mumias-board-defends-itself-against-fraud-claims-blames-management

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.