Home » Kenyan court freezes Mumias Sugar lease to Uganda-based Sarrai Group after Julius Mwale litigation

Kenyan court freezes Mumias Sugar lease to Uganda-based Sarrai Group after Julius Mwale litigation

by Chidi Emenike

There seems to be no respite for the ongoing fight among Kenyan multimillionaires over the soul and heart of the distressed Mumias Sugar Company, following a recent court ruling in Kenya. 

In a recent development, Justice Anthony Ndung’u of a high court in Kenya temporarily suspended the planned leasing of the ailing sugar miller to the Uganda-based Sarrai Group. 

Recall that after a competitive bidding process attracting eight bidders, Sarrai Group, which is led by Kenyan tycoon Sarbi Singh Rai, won a 20-year leasing permit to resuscitate the company.  

The 20-year lease, however, excludes assets such as the company’s ethanol and power generation plants, which were seized by Ecobank and the French development financier, Proparco. The firms claimed that they are owed Ksh2 billion ($17.6 million) and Ksh1.9 billion ($16.7 million), respectively. 

The firm had placed the third-highest bid, amounting to Ksh11.5 billion ($101.6 million), in the lease battle, offering less than the Julius Mwale led-Tuman and Tumaz Enterprises (Ksh27.6 billion, or $243.8 million) and Jules Gale’s Kruman Finances (Ksh19.7 billion, or $174 million). 

The emergence of Sarrai Group as the winner did not go down well with Mwale and Jules Gale, who keenly contested the result. They claimed that the group is the least qualified to win the leasing rights, considering the amount that it offered and its technical capacity. 

On this basis, Billionaires.Africa earlier reported that Mwale threatened to institute a legal action against the result. He claimed the bidding was tainted by illegalities, fraud and a lack of transparency. 

True to his threat, the tycoon filed a legal proceeding, pushing for the revocation of the lease and a new bidding and evaluation process. The multimillionaire stated that after submitting his bid, he did not hear from the receiver-manager until Dec. 22 when he learned that the tender had been awarded to Sarrai Group. 

His legal representative told the court: “The first respondent failed to notify the applicant (his client) of the outcome of its bid. Further, the first respondent has refused to disclose to the applicant the outcome of its bid in violation of the right to information under Article 35(1) of the Constitution of Kenya, 2010. To date, no reasons or explanation from the first respondent has been issued to the applicant to inform that applicant that its bid was unsuccessful or to state that its bid was incomplete and or the non-responsive.” 

On these grounds, he concluded that the receiver-manager, Ponangipalli Rao, failed to give all the bidders an open and transparent opportunity, thus compromising the integrity, fairness and accountability of the process in breach of the Kenyan Constitution. 

On his part, the receiver-manager argued that Sarrai Group is best placed to revive the operations of the ailing miller, owing to its expertise in the field, as shown by its performance in Uganda. 

Delivering his judgment, Justice Ndung’u ordered the freezing of the lease agreement and gave room for restarting again the leasing process. 

The judge said: “On the strength of the averments made, I certify the matter as urgent and admit it to hearing during the court’s recess. Upon perusal of the chamber summons seeking leave to apply for the orders of certiorari, prohibition, and mandamus, I am satisfied that the applicant has achieved the legal threshold necessary for grant of leave. I grant leave in terms of prayer two, three and four.’’

In addition, he directed Mwale to file the main case within three days and the respondents to file theirs seven days afterward. He directed the case to be heard on Jan. 24.

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