Okiya Omtatah wants Mumias Receiver Manager Ramana Rao suspended

A rights activist has moved to court seeking suspension of Mumias Sugar Company Receiver Manager Ponangipalli Venkata Ramana Rao.

Mr Okiya Omtatah wants court to prohibit Mr Rao from operating as the receiver manager of the troubled sugar miller for failing to make full disclosure of the bidders interested in reviving the company.

He claims the receiver manager is engaged in a secretive bidding process to identify a strategic investor for the company. Mr Omtatah wants the court to declare that the strategic investor to revive Mumias Sugar Company Limited must be identified through an open and competitive process.

Eight companies

In the court papers Mr Omtatah says his application for suspension of the receiver manager is urgent since on June 9, 2021 the Senate’s Agriculture Committee looking into the affairs of troubled Company directed the Manager to within 14 days re-advertise the bid to salvage the miller.

According to Mr Omtatah, the receiver manager only disclosed that he had invited eight companies to bid when he was summoned to the Senate

The bidders are listed as Catalysis Group Russia, Sarrai Group Uganda, Kruman Associates France, Kibos Sugar, Devki Group, Premier JV India, Third Gate Capital Management and Godavari Enterprises India.

"It has also emerged that none of the eight bidders he secretly invited to bid had the capacity to revive the company, leading to fears that a plan was underway to dispose of the company off to the Receiver Manager’s cronies for song," says the activist.

Public interest

He wants court to declare that Mr Rao is conflicted and incompetent, and that the KCB Bank Kenya Limited, the Receiver which appointed him (Rao), has an obligation to remove him to protect the public interest in the Mumias Sugar Scheme.

Mr Omtatah further says that two years ago when the receiver manager took over the Mumias Company to “protect its assets and to the best extent maintain its operations,” the company was processing ethanol, from molasses bought mainly from the neighbouring Butali and Busia sugar companies.

However, the ethanol operations were shut down in March 2021, thus halting all manufacturing operations at the company.

Also, without proper planning, the manager ploughed 677 Hectares of the Nucleus Estate but failed to plant sugarcane on some 307 Hectares, letting the effort go to waste.

Mr Omtatah is also aggrieved that close to two years after taking over in 2021, the receiver manager has not published a general statement of affairs on the assets and liabilities of the company as at the time he took over.

In addition, he is yet to make known the efforts he has taken to protect the assets of the company and the interests of investors (including farmers), creditors, and other parties.

Periodic reports

Further, he is yet to publish periodic reports on what he has done to reduce the KCB Group debt that is responsible for the receivership. Also not done is publication of a general statement of affairs on the current state of the assets and liabilities of the company.

The sugar miller firm, in which the government has a 20 per cent shareholding, was set up to implement the Mumias Sugar Scheme to benefit sugarcane farmers in western Kenya and its environs and the general public.

"The receiver manager who has been on site for some two years now has failed in his mission to protect the Company’s assets and to the best extent maintain its operations. Instead, he has completely shut down the company and is en route to nailing the last nail in the coffin of Mumias Sugar Scheme," reads the court documents.

Because of the Government’s 20 per cent shareholding in the company and it sits on a land acquired for the public purpose of setting up a sugar factory to serve sugarcane farmers in the Mumias Sugar Belt as well to support the economy of the wider western Kenya region, a public interest arises in how the receiver manager is running the company.

This is also because the land is idle and is not being put to the purpose for which it was acquired.

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