Retailer Tuskys in turmoil as owners eject chief executive

Kenya’s second largest retail chain Tuskys was yesterday thrown into managerial turmoil after the third generation heirs of the family-owned business dramatically ejected its chief executive, Dan Githua, accusing him of mismanaging the company.

The eviction, which was done in the glare of cameras, came just two weeks after the retail chain’s chief operating officer left in unexplained circumstances.

Mr Githua was evicted by some of the 20 grandchildren of the late Joram Kamau (Tuskys’ founder), who stormed his Embakasi
office, shouted him out of a management meeting, escorted him to his car and out of the company’s premises.

However, Tuskys directors disowned their children’s action in a Press statement sent to newsrooms later in the day.

“We the Tuskys board of directors would like to condemn the actions that happened this morning at our Head Office and regret the incident. We would like to state that the children acted on their own volition and not on behalf of the board,” the directors said even as they moved to assure the retail chain’s customers, suppliers, business partners and employees that the incident had not affected the company’s operations.

"Defied sack letter"

Mr Githua is accused of hiding the fact that he was the majority owner of a company that Tuskys had hired to recruit its employees, poor performance and exuding “disrespect and arrogance” towards Tuskys owners and staff.

“You are an 80 per cent owner of Artemis Africa Limited with Martin Mureithi as the owner of the remaining 20 per cent,” the January 23 letter, signed by two Tuskys shareholders says.

“Artemis Africa happens to be Tusker Matresses’ employee outsourcing company. Accordingly, it would be in the interest of the company and its shareholders for you to leave Tusker Matresses with immediate effect,” the letter said.

Mr Githua, who was appointed last May, is also accused of defying a sacking letter that the directors issued him in January, causing the violent eviction.

Tuskys is owned by Mr Kamau’s children Yusuf Mugweru, Mr Kago, Stephen Mukuha, George Gachwe, Sam Gatei, Mary Njoki and Mary Njeri (deceased), some of whom do not see eye to eye.

Apart from Mr Kago, the four brothers have a 17.5 per cent stake each in Orakam, the company that owns Tusker Mattresses Limited. Mr Kago and his two sisters hold the remaining 30 per cent stake, shared equally among them.

Leadership vacuum

Mr Githua’s dramatic departure came a fortnight after Peter Leparachao, the chief operating officer quietly exited the company. Mr Leparachao yesterday told the Business Daily that he had resigned to pursue other interests.

The twin departures of the top managers leave a leadership vacuum in a company, which recently launched an ambitious campaign to inject professionalism in its operations ahead of a planned listing at the Nairobi Securities Exchange.

Yesterday’s dramatic events have now dragged Tuskys back into a familiar feuding ring that Mr Githua’s hiring as the first non-family CEO in 25 years was supposed to avert.

Until now, the main actors in the ongoing feud have been the late Kamau’s children.

The infighting came to light in February 2012 when Mr Mugweru accused Mr Mukuha, Mr Gachwe and Mr Kamau of using related companies and subsidiaries to irregularly draw Sh1.6 billion from the retailer.

That is the period when Mr Mukukha was accused of physically assaulting Mr Mugweru in front of Tuskys employees at company’s Embakasi headquarters.

Last year, Mr Mugweru accused Mr Mukuha of appointing Mr Githua without involving co-shareholders, and threatened to file a winding-up petition on the business.

The domestic cracks persisted but Mr Githua went about his work – helping set up a foundation, open two branches and lining up two more that were due to be opened this month.

Mr Githua also signed agreements with oil marketer Vivo to open Tuskys’ convenience stores at Shell stations, got into deals with banks to pay suppliers before their invoices mature and had also shuffled 39 branch managers and sacked seven.

In September, Mr Githua fired Hipora Business Solutions East Africa – a firm hired to help curb rampant fraud on the shop floor – and disclosed that the business was losing more than Sh100 million every month to theft by employees.

It has now come to light that some of Tuskys shareholders and their children had lost favour with Mr Githua, accusing him of hatching a conflict of interest scheme that was hurting the company.

The Tuskys owners and their children accuse the former chief executive of sidelining them from the day-to-day operations of the company and in effect worsening its financial position.
“You have portrayed disrespect not only to the directors of the company, but also to the employees and suppliers,” the letter said.
Some of the directors’ children who evicted Mr Githua also reckon that their parents had failed to stamp their authority on the company and were as such letting an outsider mismanage their inheritance.

Mr Githua, who was unreachable for comment yesterday, is for instance accused of sidelining directors in the management of the newly-created Joram Kamau Tuskys Foundation.

Only four of the 20 grandchildren of the Tuskys founder work for the retail chain, another reality they say has seen them lose any say in the running of “their” company.

One son is a branch manager at the BebaBeba branch, another is in charge of distribution at the head office alongside another who is in charge of loyalty points at the same station. A female sibling is also stationed at the Embakasi HQ, working in the purchasing department.

One sibling, who participated in yesterday’s dramatic events, told the Business Daily that the positions are not “significant enough” for them to influence the retailer.

Mr Githua’s entry into Tuskys was hailed as a game changer for the retail chain, which was trying to ditch its feuding tag while trying to keep up with (or even beat) rival Nakumatt.

In addition to listing, the separation of ownership from management was expected to help Tuskys escape the fate of other African family-owned businesses that have proved incapable of thriving beyond the founders.

Nakumatt, Ukwala, Naivas and Eastmatt are other large retail chains that are family-owned and run.