Mumias better alive than dead
The entrance to Mumias Sugar Company. Mumias Sugar Company has shut down. This is the latest outcome in the circus of court cases that have been going on for almost 18 months.
Mumias Sugar Company has shut down. This is the latest outcome in the circus of court cases that have been going on for almost 18 months. A Kakamega court found the top brass of the Sarrai Group—the firm that has been running the sugar miller—to be in contempt of court for reopening and running the factory.
Legal minds are still scratching their heads to interpret the shenanigans around the recent development because Sarrai also has orders, including one from a three-judge Court of Appeal bench, allowing them to keep the factory running. But the top brass of the company is waiting to appear in court to show why they should not be committed to civil jail.
If the government does not intervene quickly to stop the endless circus of court cases that continue to block the re-opening of Mumias Sugar, then we may as well kiss goodbye any chances of this company ever resuming full operations in the near future. Mumias Sugar faces the same fate as Pan Paper, which is yet to resume full operations more than five years after it came out of protracted court cases.
It is a sad situation, indeed, because it seems that from the time Mumias Sugar was put under receivership way back on September 20, 2019, we left the fate of the ordinary farmer in Kakamega who depends on the factory as his only marketing outlet in the hands of bickering lenders, lawyers and judges.
The situation has been made even more complex by the parties involved in the court battles. These are fellows who are adept at dilatory tactics and have, over many years, excelled at what legal wonks call ‘forum shopping’—the endless filing of the case upon case in different locations and in courts or jurisdictions they perceive to be likely to favour their positions. In this world, delays in the conclusion of cases are treated as an occupational disease.
As you follow the cases, what you see is a gripping story of twists and turns, multiple tales where judges have recused themselves from hearing the case and where a judge is, in the middle of hearing the case, abruptly transferred to a remote place.
There have been instances where courts issued orders cancelling the Mumias Sugar lease, several cases where rulings were made against the plaintiff—and instances where the Appellate Court gave orders staying the cancellation of the lease. There was a time we woke up to an advert in the newspapers saying a new receiver, by the name Mr Kereto Marima, had been appointed to run the affairs of the company.
Securing livelihood options
The upshot of it all is that we have now found ourselves in a situation where the question of whether or not to reopen a company so important to the livelihood of hundreds of thousands of ordinary farmers in western Kenya has been left to the whims of elite lawyers and judges.
It is a pitiable situation we are in because the reopening of Mumias Sugar Company is a matter of securing livelihood options for the ordinary farmer and the hundreds of thousands of businesses in a region that survives on the ecosystem and the supply chains it supports.
Technically the government, despite being the single-largest shareholder in the company, can argue that it can do very little to save the company. Mumias Sugar Company was put under receivership by KCB Bank and power and influence are now in the hands of its secured lenders and their appointed agents. And the dispute is in court.
My view is that we have reached a point where the government must now think about dealing with these orchestrated creditor hold-outs. We cannot subjugate the interest of farmers to the whims of oligarchs whose aim is to have the factory closed. It should by now be clear to the government that the answer to the revival of Mumias Sugar will not come from those black-robed judges and lawyers in grey suits sitting in wood-panelled courtrooms.
In 2005, during the Pan Paper insolvency process, the government had to intervene and it managed to navigate around similar creditor hold-outs by forcing noisy and litigious short-term lenders, who held securities on the company’s movable assets, to sell their rights to the State. By buying them out, the government managed to come to the negotiating table and steer the insolvency process to a conclusion.
I am not saying that the tactics employed in resolving creditor hold-outs at Pan Paper will automatically succeed in Mumias Sugar. But we are at a point when we must start thinking about how to navigate around the creditors of both the ethanol and co-generation plants at Mumias Sugar.
I still don’t understand why these short-term lenders and their lawyers have been pushing for the closure of the factory. Surely, they stood a better chance of recovering their money with the factory open than shut down.
