Muite puts bank on the spot over Mumias Sugar lease deal

DISPUTE: Lawyer Paul Muite has put KCB Group and unnamed politicians on the spot over the awarding of a multi-billion shilling leasing tender for Mumias Sugar Company to Sarrai Group of Uganda.

Muite, who represented West Kenya in the dispute  hinted at a possible foul play in the bidding exercise whose outcome was annulled by the High Court of Kenya, terming the lease as ‘irregular.’

“The group owes the public an explanation as to why it sanctioned the lowest bidder for Mumias. Political leaders also need to explain why they supported Sarrai,” said Muite, who said Sarrai Group did not validly win the tender and that the entire process was marred in ambiguity.

The concerns by Muite emerged days after High Court cancelled a 20 –year lease awarded to the Uganda-based miller to manage the troubled Mumias Sugar Company on grounds that it would benefit KCB Group at the expense of the long-suffering Mumias shareholders and other lenders owed by the miller.

New administrator

Justice Alfred Mabeya on April, 14 froze the Sarrai Group deal – and kicked out Ponangipalli Ramana Rao as the administrator for Mumias Sugar Company. In his place Judge Mabeya appointed Kereto Marima as the new administrator for the miller, ordering Rao to hand over the company to the latter.

“The manner in which Rao handled the leasing process did not tally with what was expected of him as an administrator,” noted the judge in his ruling, arguing that the lease was not in line with the best interest of the company.

He continued, “The same (lease) was withheld from the court without any explanation. What did it contain that Rao did not want the court to see?” 

“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,” he queried.

Justice Mabeya’s verdict came as a reprieve for some local sugar millers and bidders who had protested at being denied the lease despite placing higher bids than the Ugandan miller. The ruling now offers them a second attempt to take over the firm’s management.

Company assets

In January this year, the County Government of Kakamega moved to the county’s High Court 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 Sh27.6 billion for the leasing of Mumias Sugar assets.

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