Strange things are happening around the ongoing revival of the once giant Mumias Sugar Company.
I keenly followed statements made during President William Ruto’s recent visit to the sugar miller. The highlight of the occasion was an announcement of a bonus payments to 15,000 farmers.
In the wake of that high-profile event, the signs are that a fresh battlefront game has erupted.
It seems to me that we are entering a new chapter in the old and bitter sibling rivalry between the two billionaire brothers; Jaswant Rai of West Kenya Ltd and Sarbit Rai’s Sarrai Ltd; the entity currently running Mumias under a lease granted by receivers the Kenya Commercial Bank.
What is the bone of contention between the billionaire brothers this time round? Ownership and control of two factories located with premises of the company namely; the ethanol distillery plant and the electricity co-generation plant.
Here are the straws in the wind. Speaking on the floor of the Senate last week, Dr Bonny Khalwale warned that leaders in the region will not allow Jaswant Rai’s Western Kenya to take control of both the ethanol distillery plant and the electricity co-generation plant.
More straws in the wind. Newspapers were reporting that milling at Mumias had been temporarily halted when hardly a day after the presidential visit a group of local leaders and farmers stormed the factory to protest the takeover of the ethanol and co-generation plants by Jaswant Rai’s West Kenya Ltd.
More straws in the wind. A letter was written by a Mr Patrick Mutuli for the receiver manager appointed by the KCB informing Sarrai that Jaswant Rai’s West Kenya was reviving the distillery and co gen plants and directing them to give West Kenya ‘unhindered access to the two plants to enable them complete their assignment’.
I ask; is it conceivable that West Kenya and Sarrai can co-exist peacefully and work together within the premises of Mumias?
Mark you the two plants cannot operate without the raw material from the mill. The way I see it what is proposed will cause total confusion because the companies have been engaged in endless battles over sugarcane poaching.
Who in truth between the two protagonists- has the legal rights over the ethanol and co-generation plants?
I was surprised to hear Dr Khalwale make manifestly wrong claim during the rally in Kakamega that the reason Sarrai had not revived the two plants was because KCB had imposed an embargo on operations of the two plants.
The senator publicly appealed to the President to intervene and direct KCB to remove the so-called embargo. The truth of the matter is that KCB has no rights over these assets.
The most intriguing aspects in these new developments is the fact that West Kenya has suddenly come out of the woodwork to claim legal rights over the two plants.
The transactions that executed changes during the trading of legal rights over the two plants were deliberately structured to conceal ultimate beneficial of ownership.
What comes out clearly from the documents that consummated relevant transactions is that that the party that bought the rights over the two plants was a British Virgin Island registered entity by the name Vertox Resources.
According to available papers the owner is a Swiss national by the name Kristian Khachatourian. The name appears in the Panama papers. West Kenya’s name does not appear anywhere in the transactions.
Here is a bit of background. Mumias had three secured creditors, namely, KCB, Ecobank and the French entity, Propaco.
KCB, the senior lender, had securities on the whole factory and the land.Ecobank had a separate fixed charge on the ethanol; while Proparco had a fixed charge on the co-generation power plant.
In September 2010, the three lenders signed an inter lenders agreement committing to amicable consultations before making any move on Mumias.
In May 2021, and before Mumias was put under receivership- KCB wrote to both Proparco and Ecobank offering to buy the loans from them at a discounted rate. The parties both refused to sell.
Victoria Commercial Bank quietly purchased the loans held by Proparco and Ecobank.
It then flipped the loans to Vertox Resources Ltd.
The first move made by Vertox on assuming the rights over the two plants was to appoint its own receiver for both the ethanol and co-generation plants.
The stage had been set for total confusion and unending court battles. At one stage, Vertox filed proceedings seeking to wind up Mumias altogether. It also filed proceedings asking the courts to force the CEO of KCB to appear in court in person to give evidence.
These latest developments may lift the veil of secrecy around details on how rights and control of the two plants changed hands. Unintended consequences? Perhaps.
The writer is a former managing editor at The EastAfrican
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