Sh3.6bn assets linked to ex-Nakumatt CEO traced

Former Nakumatt chief executive officer Atul Shah
Former Nakumatt chief executive officer Atul Shah could face criminal and civil proceedings over the collapse of retail chain should the creditors push for court action. FILE PHOTO | NMG 

Banks owed billions of shillings by Nakumatt Supermarkets have identified 11 real estate properties worth Sh3.68 billion that are linked to the retail chain’s former chief executive, Atul Shah and his family, and have identified them for possible seizure.

The assets include shopping malls, office blocks and prime land in Nairobi, Mombasa and Nakuru — where Atul’s father started Nakumatt as a retail shop. The properties are owned by third parties linked to the Shah family, which owns the bulk of Nakumatt shares, according to a document prepared by the retail chain’s court-appointed administrator.

Meanwhile, the Anti-Banking Fraud Unit under the Directorate of Criminal Investigations is investigating Nakumatt over alleged theft and money laundering. That means Mr Shah risks both criminal and civil proceedings over the collapse of Nakumatt should the creditors push for court action after the two investigations.

Creditors of the supermarket chain on Tuesday voted to wind it up after it failed to repay debts following a failed rescue attempt.

Creditors can vote to either liquidate or revive a business under administration.


After the Tuesday vote, banks are now seeking to identify properties and bank accounts linked to Mr Shah, especially outside Kenya, with a view to seizing and recovering billions of shillings the lenders are owed by Nakumatt. They are also seeking assets from third parties who acted at guarantors to Nakumatt’s multi-billion shilling debt.

“The assets are linked to Atul Shah and other related entities such as Collogne Investment Limited, Nakumatt Investment Ltd, River View Plaza and Park View Shopping Arcade among others,” said Pater Kahi, who was appointed as Nakumatt administrator in 2018.

A document from the administrator has listed properties that include a Sh2 billion property in Nairobi owned by Collogne, Park View Shopping Arcade (Sh600 million), a Sh220 million plot in Westland under Nakumatt Investments, an office block valued at Sh350 million in Mombasa and River View Plaza, which is worth Sh200 million.

“The land and buildings belong to related and third parties and not directly to Nakumatt,” said the document from the administrator.

Nakumatt owes more than Sh38 billion -- including Sh18 billion to suppliers, Sh4 billion to commercial paper holders and the rest to banks, who are more aggressive in pursuing their unpaid loans.

“Banks will now go after guarantors some of which are Nakumatt sister companies. “The guys who will walk home with zero are the commercial paper holders,” said Mr Kahi.

“DTB is owed Sh3.6 billion, Standard Chartered (Sh900 million), KCB (Sh1.9 billion), Bank of Africa (Sh328 million), UBA (Sh126 million) and GT Bank (Sh104 million).” On Tuesday, about 92 percent of the creditors voted for the liquidation. The secured creditors will share about Sh422 million received from the sale of six Nakumatt branches and the retail chain’s only remaining assets. Naivas is set to buy out the branches.

Nakumatt Holdings had lent its directors more than Sh1 billion in interest-free soft loans by the time it was placed under administration on January 22, 2018, according to a review of the company’s financial statements.

The related party transactions were recently disclosed in a report for the year ended February 2018 by Parker Randall Eastern Africa, the retailer’s independent auditor. Although the auditor did not specify which individuals owed the company the money, Mr Kahi said Nakumatt has only two directors — Mr Shah and his son.

The amounts owed by insiders, which did not attract interest charges, had dropped to Sh948 million as of February 2018, the period for which the latest financial records are available.

Mr Kahi said Mr Shah had acknowledged receiving the soft loans and informed the administrator that he had no cash, arguing he was distressed.

“Ideally, the directors should have refunded the company this money, but they claimed not to have the money,” he said.

Mr Shah did not respond to the Business Daily’s calls and text messages seeking comment.

The loans to the company’s directors are among a series of related party transactions amounting to Sh2.8 billion, which are unlikely to be recovered. Others include amounts claimed from subsidiaries in Uganda, Rwanda and Tanzania, which ceased operations.

The administrator has written off Sh1.5 billion -- or 53 percent of the receivables -- leaving a balance of Sh1.3 billion.

At its height, the company, which began life as Nakuru Mattresses, had more than 60 outlets across Kenya, Uganda, Tanzania and Rwanda, before it was brought down by Poor management and debt fuelled rapid expansion.

However, its financial problems led to empty shelves and store closures that eventually culminated in the demise of the once leading supermarket chain.

Foreign investors could have helped overhaul management and injected cash, but despite a swarm of suitors, no deal was made in the end.