Companies

Uchumi: Kirubi accused of irregular asset sale

Valuation and tendering procedures were not followed when a prime property belonging to Uchumi Supermarkets was sold to an investor for Sh147 million, a Nairobi court heard on Tuesday.

A witness testified that a valuation commissioned by Uchumi on the piece of land and building along Aga Khan Walk in Nairobi was only for the firm’s balance sheet “since there was no approval for sale.”

“Uchumi was only interested in knowing the market value of the property because it was not among the assets earmarked for sale,” said Mr Isaac Mogaka, former Industrial and Commercial Development Corporation (ICDC) company secretary.

Mr Mogaka, a businessman, was testifying during the hearing of a case in which businessman Chris Kirubi and 13 others have been accused of conspiracy to defraud the retail chain by selling the building to Allgate Limited for Sh147 million.

The accused are also alleged to have leased back the building to Uchumi for Sh1.7 million per month in 2004.

Mr Kirubi is facing a separate charge of breaching public trust as the former Uchumi board chairman by allegedly approving the sale without an independent valuation of the property.

Another witness Mr Charles Migwi, a valuer, was asked to explain how he arrived at the asset’s market value of Sh147 million, a figure said to coincide with the offer earlier made to the board by Allgate directors.

Mr Migwi told the court that in 2001, the property was valued at Sh145 million but appreciated to Sh147 million in 2004.

He denied having being influenced by the board members in the valuation.

A former Trade permanent secretary Ms Mary Ngari last year told the court that the decision by the chain’s board of director’s to sell the prime property was never communicated to the shareholders for approval.

Ms Ngari said the ministry had raised the red flag over the sale adding that the property would have attracted between Sh300m and 400m.

But she admitted the government did not enlist the services of an independent valuer to know the building’s exact market price.

She told the court the board sold the lucrative property without the approval of stakeholders including the government which had invested through ICDC and Kenya Wine Agencies.

The PS was the first prosecution witness to testify in the fraud case involving former board members and directors of the chain, who include former managing director Kennedy Thairu, Francis Emmanuel Oyugi, Joseph Munyeria Munene, Isaac Awuondo and Nigel Ralph Pavit.

Others are; Deepak Kantilal, Atul Shah, Stephen Njoroge, Amin Akbekali, Kezzy Wanjiru and Shamash Habib Manji.

Defence lawyers have faulted the witnesses’ testimony, saying the sale was conducted in the open and that the highest bidder carried the day.

The lawyers also argue that the ministry did not oppose the sale and only raised the issue long after the transaction had been concluded.

Allgate is owned by Minibakeries. Its other associate companies include; Minibakeries Mombasa, Mini Holdings, Akiyda 2000, Mibisco Company Ltd, Super Flow Flour Mills Ltd and Komarock Auto and Fabricators Ltd.

The directors, Amin Manji and Dhamash were linked to the main suppliers of Uchumi Supermarket. The hearing will continue tomorrow.