The hearing of a case involving the lease of Mumias Sugar Company was thrown into a spin on Thursday after the presiding judge withdrew from the case, citing malicious claims made against him over the handling of the petition.
Justice Alfred Mabeya disqualified himself from the case saying he did not have interest whatsoever in the matter and it was unfortunate that the allegations had been made against him by parties he did not name.
He revealed in a short ruling that complaints had also been made against him before the Judicial Service Commission (JSC) and he was no longer comfortable handling the matter.
Justice Mabeya cancelled the 20-year award to Uganda’s Sarai Group in April although the revocation was later suspended by the High Court, pending the determination of an appeal preferred by KCB Group and the Ugandan firm.
The judge also removed KCB-appointed receiver manager PVR Rao as the administrator, replacing him with Kereto Marima. The decision was also suspended by the Court of Appeal pending a ruling on September 23.
“I wish to point out to parties that I have no interest in the matter but just doing my job of dispensing justice,” he said and directed the file to be transferred to Justice Wilfrida Okwany. The case will be mentioned on July 25.
The move comes a few months after one of the lawyers, who is also a creditor for Mumias Sugar was threatened by unknown persons over the case.
Jackline Kimeto reported the matter to the Directorate of Criminal Investigations (DCI) who is investigating the matter.
The miller was placed under receivership by KCB Group in 2019 over an unpaid loan of Sh545 million.
Apart from KCB Group’s debt, the miller owed Ecobank Kenya (Sh2 billion), French development finance institution Proparco (Sh1.9 billion) and Commercial Bank of Africa (Sh401 million).
Other creditors include the Treasury (Sh3.1 billion) and Kenya Sugar Board (Sh1.6 billion).
Mumias was also operating on bank overdrafts worth Sh2.7 billion from various lenders.
Victoria Bank later took over the debts from Ecobank and Proparco and later transferred the debt to Dubai-based firm Vartox, which is now claiming Sh6 billion from Mumias.
Mr Rao was later appointed the administrator and the court directed him to complete the leasing process and report progress to the creditors.
The administrator opened the bids on December 22 last year and picked the Sarrai group as the winning bidder.
The Uganda-based company moved into the premises on December 24 and immediately started tilling the land, paving roads and doing repairs at the factory.
However, multiple cases were filed challenging the process until Justice Mabeya kicked out Rao in June for favouring KCB against other creditors.
KCB Group moved to the Court of Appeal, arguing that it would be unfair for another administrator to preside over the assets of the ailing miller yet it was a secured creditor.
Shareholders, including the State with a 20 percent stake and creditors who are owed over Sh12 billion are keenly watching the leasing deal.
Mr Rao said he settled on Sarrai Group because of its extensive experience in the sugar industry. The company has three sugar plants in Uganda crushing capacity of 19,000 tonnes per day and employs more than 22,000, he said.
West Kenya through senior counsel Paul Muite, Ms Kimeto and Dubai-based Vartox Resources Inc have opposed Sarrai’s bid.
Sarrai on its part argues that it stands to suffer an investment loss of Sh5.6 billion if the lease is cancelled.
Justice Mabeya said in his view Mr Rao had not acted openly. “If Rao found it difficult to juggle the two hats he had been bestowed with, he should have moved back to court to seek direction. The court which appointed him to double as both the administrator and receiver manager was not short of wisdom to what should have been done,” he said.
