Folly of handing Mumias to oligarchs


Entrance gate at Mumias sugar company. FILE PHOTO | ISAAC WALE | NMG

They think they are big enough, rich enough and mean enough to bully and hold at ransom the whole of the sugar farming fraternity.

I refer to the tiny elite of self-absorbed oligarchs currently pulling the strings behind the scenes, even as two siblings — Sarbi Rai of Sarrai Group and Jaswant Rai of West Kenya Sugar — fight it out in court over the leasing of the troubled Mumias Sugar Company #ticker:MSC .

The dispute has been characterised by twists and turns, signalling that we may be headed for multiple protracted court battles over the Mumias Sugar saga. As the matter drags in court, the first casualties are the sugarcane farmers who find themselves without a marketing outlet for their crop. Machinery and equipment will keep rotting away.

This week, the biggest news coming out of the proceedings was the report that the Attorney-General had, in an intriguing about-turn, submitted a new affidavit whose contents gave the impression that the legal adviser to the government was gradually drifting towards supporting interests opposed to the decision by the receiver of the company to award the leasing contract to Uganda’s Sarrai Group.

Why do I say that the court case may be made to drag in court for many years? Because this battle involves parties who are adept at dilatory tactics and have for many years excelled at what legal wonks call ‘forum shopping’ — the endless filing of cases upon cases in different locations and in courts or jurisdictions they perceive to be likely to favour their positions.

When I grow up, I will write a book about the Judiciary and commercial disputes in Kenya’s sugar industry. How our courts are unable to deliver justice cheaply, speedily and efficiently when it comes to disputes involving competitors in this sector, what we need to do to avoid the long delays before a court case reaches hearing, to shorten the hearing itself and to avoid excessive costs.

There will be a chapter with examples from the sugar sector about how courts of law can seriously damage the health of commerce. Here are a few examples.

Butali Sugar Company was licensed to construct a mill at Malava in April 2015. By filing multiple cases — mainly constitutional and judicial reviews — and through other dilatory tactics, West Kenya Sugar blocked this new competitor from starting to mill by keeping it in court in endless litigation. It was only cleared to start milling in 2010 — six years later.

When Butali started milling, it found itself engaging in explosive fights over the so-called ‘mill command areas’ or zones. West Kenya insisted that Butali was harvesting cane from its contracted farmers.

The case of Busia Sugar Industry is more illuminating in this regard. It was licensed to construct a milling plant at a location known as Bukhayo Matayos in July 2012.

The company could not start operations because of endless litigation and court battles with West Kenya, which questioned the validity of both the milling licence and the licences the company was given by Nema. The plant was commissioned in 2018.

Even Mumias itself has had explosive fights and court cases with West Kenya over allegations of cane poaching. In 2013, the parties had to fight it out in court where West Kenya accused Mumias of impounding its tractors and lorries.

Anarchy reigned in the area for several months and the provincial administration had to be called in to mediate between the two companies.

The point, therefore, is the following. Because of the preponderance of cane poaching in the former Western Province, and in view of the perennial fights between milling companies over who has stolen whose contracted farmer, the revival of Mumias cannot be in the long-term interests of the existing local sugar millers.

It is utterly foolish to hand over management of a national game park to the chairman of the local committee of the poachers association. The local sugar oligarchs cannot be part of the solution for our ailing sugar industry.