Companies

EPZ company faces closure over Sh20 million arrears

EPZ

Workers at a textile firm based at the Export Processing Zone in Athi River. Ricardo EPZ International faces imminent closure over rent arrears and unpaid licence fees. FILE

Ricardo EPZ International faces imminent closure over rent arrears and unpaid licence fees.

The Export Processing Zone (EPZ) firm, which lays the claim to being the only Kenyan manufacturer of garments at the zone, is about to be stripped of tax privileges and has been told to vacate.

In papers filed in court, Ricardo reveals that the Export Processing Zones Authority (EPZA) has directed it to cease operations over Sh20 million arrears, after talks to stagger payments collapsed.

The company, in a court application, wants orders stopping the closure, arguing the arrears accumulated when the company was placed under receivership by Trans National Bank.

“(We pray for) an order of certiorari to quash the decision of the respondent (EPZ Authority) to close, withhold licence, bar the workers from the business premises, suspend and interfere with the business operations of the applicant,” read a court filing by Ricardo.

Ricardo EPZ International CEO Richard Ndubai claims EPZA officials rejected an agreement they had reached with auctioneers appointed to collect the debt.

Mr Ndubai says a Sh3 million cheque issued to EPZ Authority was rejected and instead Ricardo EPZ was directed to clear the entire amount or stop operations.

The company says the stand taken by the authority is “dire and extremely adverse” considering the firm is just recovering after one year receivership. The company was placed in administration after it failed to meet its financial obligations and was reportedly returned to its former management just five months ago.

Mr Ndubai claims the receiver managers failed to service the monthly rent of which he learnt only after taking back the firm.

He says the firm employs over 650 permanent employees and casual labourers who risk losing their livelihood. The firm says it is ready to service the arrears through installments.

EPZ Authority, through a letter dated April 10 and addressed to Mr Ndubai, suspended the firm’s operations from April 11.

In the letter, the company is accused of violating the EPZ Act, which provides for valid licence for all companies in the EPZ, Employment Act that provides for when wage should be paid and Environmental Management and Coordination Act (EMCA) that governs disposal of waste.

“By copy of this letter, the Commissioner of Customs Services Department Kenya Revenue Authority and her officers at the Athi River EPZ are hereby notified that Ricardo EPZ ceases to immediately enjoy any and all benefits/incentives offered under the EPZ programme,” read the letter.