In January 2018, the courts in Kenya granted Nakumatt Supermarkets protection from its creditors, allowing what was once Kenya’s biggest retailer to go into voluntary administration.
At this time, the fallen giant retailer was reeling in debt amounting to at least Ksh30 billion, as empty shelves greeted customers and soon branches started closing one by one.
Today, it has been revealed that directors of the company pocketed billions of money before the company collapsed, amounts that may never be recovered.
According to Parker Randall Eastern Africa, Nakumatt’s independent auditor, the directors borrowed at least Ksh1 billion in interest-free soft loans by the time it was placed under administration. As of February 2018, the amount stood at Ksh948 million.
“Significant in this net balance is Ksh948 million due from the directors. These receivables are not supportable based on the available evidence. The amounts due from a director are interest free. They relate to short-term advances through a current account,” reads the auditor’s report in part.
The report notes that the amount is part of Ksh2.8 billion of related transactions that the company ‘lost’ in the suspected looting spree. Some of the amount was claimed from its Uganda, Rwanda and Tanzania subsidiaries, which ceased operations.
The administrator has written off Ksh1.5 billion of the receivables, leaving a balance of Ksh1.3 billion.
“There are no repayment plans for these balances; the companies frequently lend and borrow funds from each other,” the auditor said.
On top of the scandal, Nakumatt founder Atul Shah is facing investigations for writting off stock worth Ksh18 billion in May 2018, before the company collapsed.
The company has closed almost all its 60 outlets across Kenya, Uganda, Tanzania and Rwanda.