Kenya’s capital markets regulator has hired another firm to carry out a fresh forensic audit at troubled sugar miller Mumias, saying the earlier investigations into the company had “quality” issues.
The Capital Markets Authority (CMA) says those implicated in the fresh investigation will be prosecuted.
“The authority confirms it has commissioned an independent forensic audit to establish the state of affairs of Mumias Sugar Company, which is ongoing,” said CMA said in a response to Business Daily queries.
“This is a separate process from the one earlier conducted by KPMG and is being undertaken by a different entity.”
The regulator declined to reveal the identity of the consultants carrying out the new investigations, but said findings will be disclosed once the study is completed.
CMA said an earlier probe it had commissioned had concerns over the quality of initial findings hence the need for a fresh investigation.
KPMG was hired in May 2014 to do a forensic audit at Mumias Sugar following allegations of illegal sugar imports by the miller’s top managers, which led to the exit of chief executive Peter Kebati, finance director Chris Chepkoit and commercial director Paul Murgor.
Mumias Sugar in February last year moved to court to recover Sh1.1 billion from four former executives including Messrs Kebati, Chepkoit, Murgor and company secretary Emily Otieno.
CMA says the fresh probe will trace and track happenings at the sugar miller and recover any looted or wasted company funds.
The Mumias executives were accused of abetting shipment of cheap sugar from Sudan’s Kenana Sugar Company, which was later re-sold under the listed firm’s brand.
The scam involved Mumias sugar managers engaging third parties to import cheap sugar, repackage it as Mumias and raking in super profits for themselves, court documents show.
Mumias alleges in court papers that the four executives secretly came up with a sugar purchase plan to cater for the miller’s production shortfall and presented it to the board of directors for approval yet they are the ones who may have benefited instead of the company.
The firm now wants details of the said account disclosed so that prosecution of the four could be initiated in a bid to recover Sh1.1 billion.
The allegations of corporate sabotage come on the back of a loss-making streak at Mumias Sugar, with the miller also seeking a government bailout.
Mumias Sugar last month said is seeking an additional Sh2 billion bailout from the government after crushing deeper into the red in the six months to December 2015. The miller received Sh1 billion last year from the Treasury.
The distressed sugar miller posted a Sh1.58 billion loss after tax in the half-year period compared to Sh1.45 billion net loss in the six months to December 2014.
Sugar sales grew by a tenth to Sh2.9 billion, bottled water sales dipped by more than a third to Sh8.6 million while the company recorded zero revenue from its energy business as it didn’t sell any electricity to Kenya Power.