Ex-Mumias Sugar managers’ bid to block accounts probe flops
The entrance to Mumias Sugar Company. Three former senior employees of Mumias Sugar Company have lost their bid to block investigations into their bank accounts.
What you need to know:
- The three wanted to stop security agents and the Capital Markets Authority (CMA) from probing their bank accounts over the alleged fraudulent sale of sugar.
- The police suspected the proceeds of the sales were being banked in their accounts but they protested against the decision, saying they were no longer employees of the troubled miller.
- The court said the warrants were obtained lawfully and not out of the imagination as claimed by the trio.
Three former senior employees of Mumias Sugar Company have lost their bid to block investigations into their bank accounts.
Mr Peter Hongo, Mr Paul Murgor and Ms Pamela Lutta moved to court in 2017 to stop security agents and the Capital Markets Authority (CMA) from probing their bank accounts over the alleged fraudulent sale of sugar.
The police suspected the proceeds of the sales were being banked in their accounts but they protested against the decision, saying they were no longer employees of the troubled miller.
Justice Hedwig Ong’udi dismissed the petition, ruling that there was reasonable suspicion when the police obtained the warrants to investigate the accounts.
The court said the warrants were obtained lawfully and not out of the imagination as claimed by the trio.
“Just as was the case with the other allegations of constitutional violations, the petitioners have failed to prove how their dignity was interfered with by the respondents, who were simply carrying out their mandate in a dignified manner,” the judge said.
The judge stated that the law empowers the CMA to initiate investigations against a suspect on its motion.
Mr Hongo worked at MSC between 2010 and May 2014 as head of sales and marketing, Mr Murgor was the commercial director from September 2008 to August 2014 while Ms Lutta was the marketing head from February 1999 to May 2016.
The three said they were asked to attend interviews in January 2017 and apart from the notice, the investigators did not ask for bank accounts and statements.
Investigations
Later, an investigator with the CMA Fraud Investigation Unit obtained a warrant to investigate their bank accounts.
They said they later learnt that the warrants and investigations related to the theft of Sh16.4 million from the alleged sale of sugar, which had allegedly been banked at Prime Bank, Nakuru branch and Riverside, Westlands branch in Nairobi.
The CMA alleged that between 2009 and 2012, Mr Hongo and Mr Murgor together with other senior managers provided excessive discounts through credit notes to select customers amounting to Sh3.1 billion.
The CMA commenced an inquiry into the affairs of MSC in 2015, which subsequently led to investigations into the bank accounts.
The regulator said that during the inquiry, it was noted that the senior management of the company issued excessive trade discounts in the form of credit notes to specific customers at the expense of the miller.
The court heard that it was further established that no board approval was sought before granting the discounts in excess of the 10 per cent management limit.
The regulator noted that there was evidence of suspicious and substantial cash inflows and outflows which were not commensurate with one of the petitioner’s known incomes at MSC.
This raised reasonable suspicion that the bank account may have been a collection and distribution account for monies due to the miller but irregularly redirected to persons working for or related to those working at MSC.
According to the CMA, the request to investigate the accounts was not an invasion of their privacy as it was based on reasonable apprehension that the bank accounts may have been used to commission illegal acts relating to MSC.
The court was also informed that apart from the three, there were eight other people who were being investigated then, over the same matter.
The judge said the former senior employees moved to court prematurely. “I say so because as stated by the CMA, the investigations being done were inquisitorial, and it is only after the petitioners have received the notice to show cause that they would be granted an opportunity to be heard,” ruled justice Ong’udi.
