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How Rai Family Scuttled Dream To Revive Mumias Sugar Company Through Politicians

Jaswant Rai
Jaswant Rai. [PHOTO/ COURTESY]

Kickbacks, politics and the Rai family factor ended the dream to revive Mumias Sugar Company, Kahawa Tungu can authoritatively report.

Initially, Narendra Raval through his company Devki Group had won the bid to lease Mumias Sugar Company and was ready to pump in Ksh5 billion, but the plans ran into headwinds, collapsing even before take-off.

Mumias Sugar Company was placed under receivership in 2019, with the Kenya Commercial Bank (KCB) appointed as the administrator.

Since then, the lender has been looking for a strategic investor to run the sugar mill, which is at the heart of Kakamega County. The bank finally struck a Ksh5 billion deal this year.

Read: Devki Group Withdraws Bid to Lease Mumias Sugar Company After Concerns from Western Leaders

In the deal, Mr Raval would have invested Ksh4 billion in refurbishing the factory, and used an additional Ksh1 billion to pay farmers who supplied cane to the company but have not been paid.

The plan would however never see the light of the day, even as politicians blocked the takeover.

Our investigations revealed that politicians from the larger Luhya community were used by Raval’s business rival Jaswant Rai to scuttle the plans.

Top in the list is Kakamega Senator Cleophas Malala, who was allegedly demanding a kickback of Ksh100 million before the factory was handed over to Devki.

Malala, who has come out as the “staring character” in the charade, even went public in pretense of seeking transparency in the deal.

Read: Cash Strapped Mumias Sugar Lays Off All Its Employees

In what looked like a well choreographed act, Malala started talking about the takeover a day after Amani National Congress (ANC) party leader Musalia Mudavadi also “sought transparency in the deal”.

“I call on the committee to address the current state of the company’s assets and liabilities and reveal which entity undertook the valuation. Specifically, the committee should address the bidding process including who the bidders were, when the bidding took place, when the evaluation of submitted tenders was done, what criteria was used to pick the successful tenderer,” said Malala.

Seemingly, the rhetoric was well planned to resonate around the same agenda, with Bungoma senator Moses Wetangula demanding an asset evaluation report, farmers’ debt repayment plan and a full financial audit from 2016 to date.

The whole play was masterminded by Rai, who owns West Kenya Sugar Company, and has been the biggest beneficiary of the collapse of Mumias Sugar Company.

Malala, who was to lead the agenda in Senate, but the issue backfired, with the Luhya nation turning against him for chasing away Raval.

senate
Kakamega Senator, Cleophas Malala

Mumias Sugar Company was a source of livelihood for thousands of families in Western region. With one year left to the general elections, the wrath of the residents could render Malala and others “jobless”.

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

Already, politicians from the region are looking for a narrative that will defend Malala, this writer understands.

According to Raval, the takeover was meant to help the local farmers, and also break what he said are cartels in the sugar sector that have frustrated local production in favour of imports.

“I am not interested in Mumias to make more money. God has given me enough investments and industries, but I want to change the life of farmers and break this monopoly formed by a cartel among players in the sugar sector,” he told The Standard in an interview on Friday.

Before Mumias Sugar Company went under, it had a debt burden amounting to Ksh12.5 billion as of June 2018.

The company owes EcoBank Kenya Ksh2 billion, KCB Ksh545 million, French development finance institution Proparco Ksh1.9 billion and Commercial Bank of Acfrica (noe NCBA) Ksh401 million.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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