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How the Carelessness of Miwani Sugar Company Receivers Made it Lose 10,000 Acre Piece of Land

Miwani
[PHOTO/ COURTESY]

As of 2007, Kenya had five giant sugar millers among them Muhoroni Sugar Company, Sony, Nzoia, Chemilil, and Muhoroni.

Fast forward to July 10, 2020 when the Agriculture and Food Authority (AFA) through its Director General, invited international expression of interest for leasing and operating the five state-owned sugar factories.

Unknowingly or ignorantly, the government did not know that Miwani Sugar Company could not be leased, since the land that the factory sat on was auctioned in 2007 due to debt.

The auction was decreed by the court after Miwani Sugar company failed to pay a debt for consultancy services owed to Nagendra Saxena dating back to 1987. Nagendra Saxena moved to court seeking USD400,000 (approximately Ksh40 million in the current exchange rate) compensation, that the company ignored.

 

As of December 2007, due to interest accumulation, the money had accumulated to Ksh1.09 billion. As a result, the High Court allowed Saxena to auction the land to recover the money. Court documents in our possession show that the company was not represented in court, giving the court no other option than to allow Saxena to auction the company assets to recover the money.

The 9,394-acre piece of land was bought by a private company, Crossley Holdings Limited, in an auction conducted by Jogi Auctioneers.

According to court documents in a case filed by senior counsel James Orengo, Crossley acquired the land during a public auction on December 24, 2007, for Ksh752,000.

“The Petitioner/Applicant/Applicant is the only registered proprietor of all that parcel of land known as L.R. 7545/3 (I.R. 21038) Kisumu and the holder of its title, after bidding for it successfully for Ksh. 752,000,000/- at a public auction held on 24th December 2007,” the court documents read in part.

Read: RentCo Signs Farm Equipment Leasing Deal with Rai Group’s West Kenya Sugar Company

The court case was triggered by an ad in the dailies in July, as the Agriculture and Food Authority sought to lease five state-owned millers to international investors.

“The factory, which was previously associated with Miwani Sugar Mills, is situated on a parcel of land known as L.R. No. 7545/3 I.R. No. 21038. The land belongs to and is vested in the name of Crossley Holdings Limited. Our clients acquired the land lawfully through a public auction. It is therefore not legally tenable for Miwani Sugar Company (1989) Limited (in Receivership) to be included in the list of factories designated for leasing under the objective and scheme for redevelopment as proposed in the advertisement. In the circumstances Miwani Sugar Company (1989) Limited (in Receivership) should be removed from the list,” Orengo said in a letter dated July 17, 2020.

According to court papers, the company raised complaints, and the Ministry sought for an out of court settlement, but never committed to withdrawing the International Expression of Interest (IEOI).

“The Ministry of the Agriculture, Livestock, Fisheries, and Cooperatives (MOALF&C) is pleased with the position taken by the parties to this matter and remains committed to exploring the possibility of settling this matter out of Court,” Agriculture CS Peter Munya said in a letter dated August 11, 2020.

An out of court settlement had also been recommended by Kisumu Governor Prof Anyang’ Nyong’o in a letter to the national government.

“I propose that you select a committee from the Ministry of Agriculture, Livestock, Fisheries and Cooperative Development; Both the Attorney General’s office and mine should also be involved. This should be done within the spirit of negotiation by further inviting M/s Crossley Holdings Limited with the aim of settling the issues out of court and determining the way forward in the context of overall Government policy,” said Nyong’o.

Seemingly, the government shunned advisories for an out of court settlement, that would have probably seen Miwani recover the land and save each of the involved parties time and resources.

In court filings, Crossley wants to be paid special damages amounting to Ksh6 billion for loss of income, or be paid Ksh4.6 billion as a refund, as per the current market valuation.

“For over thirteen years the Petitioner/Applicant (Crossley) has been out of the use and possession of its land, suffering immense financial loss running into billions of shillings which loss is about to be aggravated by the actions and conduct of the 1st, 2nd and 3rd  Respondents (Ministry of Agriculture, Agriculture and Food Authority and the County Government of Kisumu respectively) through the intended leasehold and the intended Special  Economic Zone demarcation,” said Orengo in court papers.

Read: KCB Places Loss-Making Mumias Sugar Company Under Receivership

In 2019, Crossley alongside Sukhwinder Chatte, Ian Maina, Philip Odongo and Epanaito Okoyo were sued by the Director of Public Prosecutions (DPP) for “illegal” sale of the land. They were however acquitted, and two found with a case to answer.

Adulakadir Elkindy, a former magistrate, and Moses Osewe were found to have conspired to defraud the state firm of 9,394 acres of land between May 21, 2007, and January 30, 2008.

The land was formerly owned by Miwani Sugar Mills Limited a private limited company, whose assets and liabilities were taken over in 1989 by Miwani Sugar Company.

As of June 1998, the company (Miwani) owed creditors Ksh2.07 billion while shareholders loans amounted to Ksh715 million.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. Believes in unearthing societal rots that have been hidden from the public eye.
Follow me on Twitter @FmuliKE. Email francis@kahawatungu.com

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