Mumias Sugar Company Receiver Manager has defended its move to lease the sugar mill to Sarrai  Group. KCB Bank which is the Receiver Manager of the miller yesterday accused West Sugar Company of not producing any financial statements which was a basic requirement to ensure good corporate governance.

In an affidavit by the Administrator Ponangipali Venkata Ramana Rao, the court was told that West Kenya had more than 100 cases over a span of 13 years that were all against either an employee or a competitor.

The affidavit was in response to a suit filed by five farmers and West Sugar who argued their case on Wednesday opposing the award of the lease to Sarrai Group.

Five farmers who filed the suit are; Lambert Lwanga Ogochi, Augustino Ochacha Saba, Prisca Okwanko Ochacha, Robert Mudinyu Magero and Wycliffe Barasa Ng’onga.

They obtained orders on January 14, stopping any operations at the sugar milling plant after they challenged the lease on the basis that it was undertaken in an opaque manner.

KCB and the Administrator, however, claims  they had to consider several factors which included whether the bidder was able to pay the rental fee for the period of the lease, whether the bidder has the capacity and experience to operate the assets and whether the bidder has any conflict of interest which may incentivise the bidder to avoid operationalising the plant.

“No plan was submitted for the proposed investment of Sh4.6 billion by West Sugar. The lack of detail in the investment plan made it difficult for me to assess whether the plan will be effective,” claimed Rao in court documents.

Reference letters

Rao claimed  West Kenya only provided reference letters from its bankers but failed to provide a letter from its bankers confirming the availability of the funds set out in their bid.

It was their contention that conflict of interest was identified as West Kenya had a factory 36 kilometres east and another factory 35 kilometres northwest of Mumias Sugar Company.

“I am aware that sugar mills within the western region are in competition over cane and other resources.

West Kenya factories are close to Mumias Sugar Company’s plant and the successful bidder will have to work towards reviving Mumias while competing with West Kenya for cane and other resources needed in milling process,” he said.