Lawyers Seek Lease Agreement Between Mumias Sugar Company And Sarrai Group

A Law Firm has written to Mumias Sugar Company Limited Receiver Manager and Court Appointed Interim Administrator, Mr Ponangipalli Venkata Ramana Rao seeking a copy of the lease entered into with Sarrai Group on December 22, 2021.

In the letter copied to among others, High Court Deputy Registrar, Commercial and Tax Division, Wekesa and Simiyu Advocates has also requested Mr Rao to demonstrate the time frame in months and years that the highly contested lease will take to “extinguish the lawful indebtedness of Mumias Sugar Company,” his appointing authority as a Receiver and when the first payment was made pursuant to that lease.

Also sought for by the law firm is a copy of the evaluation criteria prepared at the time of making the invitations for bids to lease the assets of the company. Additionally, the firm would like to have particulars of payments Mr Rao has made to himself as receiver/manager’s charges per annum since his appointment as the receiver up to December 31, 2021.

Wekesa and Simiyu Advocates have also asked Mr Rao to furnish them with a copy of the inventory of the company’s assets that were not handed over to Sarrai Group, and part of the assets that were not subject of his evaluation of the tenders submitted.

“Please furnish copies of the consents procured by yourself and the successful bidder from the Competition Authority and the Capital Markets Authority and any other statutory bodies as condition precedents prior to entering any lease and handing over the company assets to Sarrai Group,” the letter adds.

The firm would also like Rao to confirm the number of bank accounts and balances he found in existence in the name of the company when he was appointed as a receiver as well as a detailed statement of account of all payments and receipts arising from the receivership of the company from the date of appointment to date. In addition, it would like an inventory of the intellectual property owned by the company to copyright, trademarks, patents and industrial design, among others.

In a separate matter before the court, five farmers, Lambert Lwanga Ogochi, Augustino Ochacha Saba, Prisca Okwanko Ochacha, Robert Mudinyu Magero and Wycliffe Barasa Ng’onga are challenging the leasing of Mumias Sugar Company to Sarrai Group and are seeking an injunction stopping the same. Together with West Kenya Sugar Company and Mumias Outgrowers (1998) Limited, they argue that the leasing was opaque and did not follow regulatory approvals.

The defendants in the case are Mr Rao, Kenya Commercial Bank (KCB) Limited, the Attorney General, Cabinet Secretary Ministry of Agriculture, Livestock and Fisheries, Competition Authority of Kenya, Sarrai Group Limited, Chief Land Registrar, County Government of Kakamega and Capital Markets Authority.

The farmers’ lawyer, Mr Kibe Mungai had told Presiding Judge at the Milimani Commercial Court, Justice Alfred Mabeya that the lease was granted to Sarrai Group which was the lowest bidder at Ksh 5.8 billion leaving out West Kenya Sugar which was the highest bidder at Ksh 36 billion.

West Kenya Sugar Lawyer, Paul Muite pointed out that Mumias is a valuable company in terms of asset base and that West Kenya Sugar had offered Ksh36 billion in addition to a monthly rent of Ksh150million, an upfront deposit of Ksh900million as security for a monthly payment and a bank guarantee security bond of Ksh500 million.

In response, Sarrai Group says the lease for operating and taking over assets of Mumias Sugar Company was not marred with “improprieties, fraud and apparent corruption as averred” and the farmers have failed to place before court convincing material to demonstrate corruption in the process leading to the award of the lease to the company.

The County Government of Kakamega has raised a preliminary objection to the suit saying it is misconceived, incompetent and does not show reasonable cause of action against the county.

Competition Authority of Kenya (CAK) says no merger approval has been submitted to them in relation to leasing of the assets of Mumias Sugar and it is evident that Mr. Rao’s decision to handover the assets of the company to Sarrai Group is in blatant disregard and violation of the law and amounts to criminal conduct under Competition Act 2010.

Read: Court Urged To Stop Leasing Of Mumias Sugar Company

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