President Ruto’s comments on Mumias Sugar signal worrying trend by Kenyan government towards investors
Details of a scandal allegedly involving Kenya’s sugar industry and Kenyan authorities have escalated after President William Ruto made threats to whoever would stand in his way.
On Monday, 28 August 2023, senior members of Kenya’s Government issued a public address to investors in the Mumias Sugar Company, ordering them to vacate the buildings of Kenya’s largest sugar manufacturer.
The Mumias saga has lasted over a decade, after a 2012 forensic investigation by audit firm KPMG found procedural and financial irregularities which had allegedly been concealed by senior management.
Dilapidated machinery at Mumias Sugar Company’s refinery. (The Standard)
Mumias was placed under receivership in 2018, leading to dozens of legal cases being filed in the Kenya High Court against the firm and several conglomerates bidding for its ownership. Eventually, Ugandan firm Sarrai Group was awarded the lease.
The Competition Authority of Kenya ruled in March 2022 that the lease of Mumias to Sarrai was fraudulent as Sarrai Group’s bid was the lowest of the 8 bids made. The successful complaint was lodged by West Kenya Sugar Company, owned by Jaswant Singh Rai. Sarrai Group is chaired by Jaswant Singh Rai’s brother, Sarbjit Singh Rai. Both are heirs to the late Tarlochan Singh Rai’s multi-billion estate.
Jaswant Singh Rai, owner of the Rai Group and West Kenya Sugar Company. (Nairobi News)
Mr. Jaswant Rai is the billionaire owner of the Rai Group of Companies, which include the Menengai Oil Refineries, Kinyara Sugar works in Uganda, and the West Kenya Sugar Company.
On 31 July 2023, the Kenyan High Court appointed one Harveen Gadhoke as the new administrator of Mumias, as part of efforts to revive the collapsed company after over a year of stagnant lease disputes. Mr Gadhoke insists that he was appointed administrator without his approval. Yesterday, Mr. Gadhoke formally declined his administrator position in a court filing.
Mr. Jaswant Rai was reported missing by his family on Saturday 26 August, when they filed a missing person report with the police. CCTV footage began to circulate, dated 25 August, of individuals resembling plain-clothes police officers abducting Mr. Rai. They took Mr. Rai from his car while in traffic in Nairobi, forced him into their vehicle, and held him at a currently unknown location.
Mr. Rai’s whereabouts were not known until Monday morning, when his lawyer, Kioko Kilukumi, said he had been returned to his family on Sunday evening. Mr. Kilukumi told press that his client had refused to disclose any details of his ordeal and had yet to decide whether he would take legal action against his captors.
Responding to the abduction and other incidents, Mr Eric Theuri, President of the Law Society of Kenya, expressed alarm at Mr. Rai’s disappearance and, in a public address held on 29 August 2023, condemned attempts by the DCI at intimidating people connected to the matter. Mr Theuri voiced his fear that recent events signalled a potential resurgence of extrajudicial actions by authorities. He demanded that the police explain their alleged actions. Amnesty International and Haki Kenya also joined Mr Theuri in their criticism of the Government’s action and alarm at the spiralling descent into extrajudicial intimidation.
Eric Theuri, President of the Law Society of Kenya. (The Standard)
Yesterday, Kenya President William Ruto appeared at a rally in Bungoma, and made comments that represent a shocking escalation of the case. He assured those present that he would break Kenya’s sugar cartels, and levelled threats against all affiliated with Mumias. He ordered any individuals at Mumias headquarters to vacate the building and said in Kiswahili that the Mumias investors have “three options should they want to be a nuisance: leave Kenya, be sent to jail, or travel and go to heaven.”
The threats made by a sitting president at a public rally reflect a dramatic change of approach by the Kenyan authorities and is unlikely to win the confidence of investors or the business community.
Kenya has already dropped from the second to fifth place in attractiveness, according to this year’s Deloitte African Investment Attractiveness survey, and the investment community will no doubt be watching the latest developments with great concern.