Rai sugar firm to face MPs over Sh260m disputed loan

West Kenya Sugar Company has been ordered to appear before a parliamentary committee over allegations that it has defaulted on a Sh260.8 million loan advanced by the Commodities Fund.

The agricultural financier told the National Assembly's Special Funds Accounts Committee that West Kenya Sugar Company, associated with billionaire businessman Jaswant Rai, had been uncooperative and dodgy when asked to service the loan.

The loan balance includes legal fees of Sh2.4 million that has been in dispute.

“West Kenya should appear before this committee to explain why they have refused to pay government money,” committee chairman Murungi Kathuri, also South Imenti MP.

Commodity Fund Managing Trustee Nancy Cheruiyot said the legal fees that is in dispute was incurred by the former Kenya Sugar Board on behalf of West Kenya in 1997.

West Kenya applied for a loan of Sh60 million but was advanced Sh40 million. The legal fee was incurred towards the security documentation for the approved loan.

“Their account was debited with the cost of the transaction but the company has disputed the cost as too high in their view,” said Ms Cheruiyot.

She told MPs the agency — mandated to provide credit to the sugar mills to ensure they remain afloat — is struggling financially due to historical loans.

“Currently we do not have any money to lend because the levies that were there were scrapped. We currently rely on loan repayments to be able to disburse,”said Ms Cheruiyot.

She added the agency was yet to get support from the exchequer, including its Sh2 billion request made for the current financial year.

Auditor-General Edward Ouko has flagged an outstanding loan balances of Sh8.4 billion at the Commodity Fund, expressing concern that chances of recovering the money are slim.

Mr Ouko said no evidence had been provided for verification showing actions being taken to ensure recovery of the outstanding loans and incurred interest.