Mumias Sugar Company is facing a threat of winding up after a bank involved in the controversial importation of 10,000 metric tones of sugar sued the firm seeking Sh93 million.
Acting managing director Coutts Otolo told a parliamentary committee that the company entered into a “bad” transaction to import sugar leading to massive loses.
Mr Otolo was taken to task to produce a forensic audit report on the importation of sugar conducted by KPMG.
The acting MD told the Agriculture Committee chaired by Mohammed Noor that he was unable to provide the confidential report, which is in the custody of the company’s board and KPMG.
Mr Noor directed that the board be summoned on Thursday to produce the report to enable the committee conclusively investigate the sugar importation by the publicly listed firm.
In his oral submissions to the committee, Mr Otolo said that Mumias Sugar is set to file claims against an agent, individuals and staff who were involved in the importation of sugar that has forced the company to pay twice for the imports.
He said that about Sh460 million was banked into an account of the third party that was purported to be for Mumias by those who purchased sugar from the company.
He said Sudan’s Kenana Sugar Factory, where the 10,000 metric tonnes were imported from, was never paid forcing Mumias to pay again.
About 300 tonnes are still lying at Mombasa port since importation in February 2012, Mr Otolo said.
“The whole transaction was conceived and intended to be executed in accordance with all regulation that surround imports but it went sour. This has made MSC to pay twice,” he told MPs. “We are in process of ascertaining loses the company incurred. We don’t have the final figure.” He said that the firm would pursue a third party (agent) it subcontracted to facilitate the importation of the sugar from Kenana.
“I am at pains to disclose the third party or the bank because it will prejudice the claims that we intend to pursue in courts to seek recoveries. I seek your indulgence that I don’t disclose this third party,” Mr Otolo said when pressed by MPs Opiyo Wandai, John Serut and Benjamin Washiali.
The MPs had demanded to know the name of the firm or individual that was subcontracted by Mumias to facilitate the importation of the sugar.
“When we gave you one month to furnish us with the KPMG report and you don’t, let us declare the witness hostile and throw him out,” said Nyando MP Fred Outa.
Mr Otolo failed to table the KPMG audit report which he said is under lock and key by the board of directors.
“We don’t have a hard copy of the report. The report was shared with the board and returned to KPMG for safekeeping as investigations go on. The board has a softcopy and are keeping it confidential due to the sensitivity of the report,” he said.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
