A storm is brewing at listed agricultural firm Kakuzi where some minority shareholders are questioning the process of contracting two management service provider firms.
The shareholder, in a letter written to the Capital Markets Authority (CMA), are also alleging being sidelined by the board in addressing the questions raised at the May 16 AGM.
“We seek to know how Kakuzi PLC sourced Robertson Bois Dickson Anderson (RBDA) and Eastern Produce Regional Services (EPRS) Ltd.
"They also seek to know whether or not the mentioned companies have provided any services to Kakuzi PLC and any payments thereof that the two firms received during the period," the minority shareholders state in their letter dated June 16. "Further, we want to know whether the companies are in any way owned or related to the incumbent Kakuzi PLC managing director and Finance Director”.
The management of Kakuzi PLC states Chris Flowers, the MD, is not in any way affiliated to the two contractors, ruling out conflict of interest.
“Both EPRS and RBDA are ultimately owned by Camellia PLC. Chris Flowers has no shareholding in these companies and, for the record, has no performance bonus structure with these companies or Kakuzi PLC for that matter. Flowers is an employee of EPRS Ltd and, under the contract by EPRS Ltd with Kakuzi PLC, performs the role of the managing director to Kakuzi PLC,” Kakuzi indicates.
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Kakuzi also says the contracting of the two management service providers carries cost savings. It paid EPRS Ltd Sh112.3 million in the period ended December 2022, an increase from the Sh74.4 million paid in the period ended December 2021.
Official documents from Kakuzi also reveal the firm made no payments to RBDA in 2022 with Sh24.7 million having been paid for the period ended December 2021.
“Kakuzi PLC receives services from various related party companies, including EPRS and in the past RBDA".