The Standard ­ Monday
Date: 09.02.2015
Page 6,7
Article size: 829 cm2
ColumnCM: 184.22
AVE: 442133.33
Businessman at centre of the
Shl.2b sugar import scandal
The largest single share holder sold all his 14.4
million shares after it became apparent that the
company was no more than a shell
By MOSES MICH IRA
High flying businessman Benson overseas but agreed to discuss the when these
Sande Ndeta (pictured below) was re­ dossier. He maintained that he was losses crys­
laxing in the US with his family dur­ just helping out Mumias which "was tallise, the
total loss­
ing his Christmas holiday when the going through a rough spot".
email came.
Ndeta said he owns 100 per cent es in the
The email hit his inbox on Decem­ of Dantes Peak, a company that was imp orta­
ber 14,2012. It was from Mumias Sug­ handed the sugar import deal de­ tion racket
ar Company and the contents went spite never having imported even a alone could
straight to business: "We are formal­ kilogramme of sugar in the country balloon to
ly requesting you to quote for the sup­ before. His firm, who's other share­ approxi­
ply of sugar (import) from a Come­ holder is listed as Yvonne Katusime, mately Sh765
million.
sa country to the tune of 100,000 is registered as a cement and bal­
"This loss
tonnes in one year starting from Jan­ last company. He had no sugar
uary 2013."
The email author was Mumias Fi­
nance Director Chris Chepkoit.
What Mr Ndeta did not know then
importation licence.
was occa­
The management gave Nde­
ta's firm the deal long before go­
ing to the board for approval in
sioned by paying higher than agreed
costs for the imported sugar as well as
was the missive was the beginning of contravention of procurement
a Shi.2 billion importation scandal procedures. Had the deal gone on
that would later haunt the million­
aire.
as planned, Mumias was to make
over Sh300 million to boost its profit­
sales of the same at values that were
significantly lower than the cost of the
sugar," KPMG says.
"As at the date of the board
Upon receiving the email, Nde­ ability. But everything went south al­
ta had to cut short his holiday and most as soon as the ink on the con­
hopped onto the next flight back to tract had dried.
Nairobi.
According to KPMG, Dantes
The millionaire, who is the most lacked the financial muscle to deliv­
significant outside link to the impor­
tation scandal, arrived in Nairobi sev­
er on the deal but Mumias executives
went ahead to vary the quantities to
eral days later to be handed the con­
be imported to the detriment of the
troversial contract that left Kenya's miller. Ndeta strongly refuted these
biggest miller bruised and bleeding. allegations.
Ndeta, the chairman of Savannah
"Mumias approached me to im­
Cement comes from Mumias and has
port sugar on their behalf. They
a long standing relationship with the
gave me a contract of 100,000 met­
ric tonnes of sugar. I brought the first
The land on which Kenya's big­ 10,000 metric tonnes with my own
gest sugar miller sits on in Mumias is money and Mumias was supposed to
sugar company.
understood to have belonged to his sell and give me back my money. I am
grandfather.
the one who ended up losing money,"
Ndeta told The Standard in the tele­
FORENSIC REPORT
phone interview.
Eventually, Mumias was left in
seen a copy of the top secret forensic a position where it took direct re­
report by audit firm KPMG, however, sponsibility and all liability for all
finds it ridiculous that 'journalists' actions with regard to importation
would focus on him yet he is men­ including those it did not initiate.
Ndeta who is mentioned and has
tioned in less than 10 pages in the
The transaction resulted in Mumias
incurring losses of Sh531 million
An architect by profession, Ndeta without taking into account contin­
likes to come out as a man of means. gent costs of Sh233 million.
In an interview with The Standard KPMG says that
338 page report.
which he conducted via phone after
returning our call announced he was
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
The Standard ­ Monday
Date: 09.02.2015
Page 6,7
Article size: 829 cm2
ColumnCM: 184.22
AVE: 442133.33
approval, MSC manage­
ment had already con­
firmed to Dantes Peak
that they would be the
importers of the sug­
of sugar than what they had actually
paid for. The management then went
ahead to 'tone down their reports to
the board on the sugar importation
transaction' to make it look as if all
was well. Despite making a second
the quantity of sugar and third adjustment to the contract,
to be imported and the firm eventually failed to deliver
ar on MSC's behalf,
estimated date
and this forced Mumias to enter in­
Ndeta con­
veals, it was apparent that Kenana
had only received Euro 500,000 out
of an expected Euro 5,480,000 — less
than a tenth of the money.
KPMG also found that an attempt
was made to open and operation­
alise a special account known as an
of arrival of the first to a direct contract with the supplier
shipment," the re­ ­ Kenana Sugar Company of Sudan.
By this stage, KPMG reports re­
port reads.
firmed that he had
seen the copy of the
report and admits
he indeed owned
Dantes Peak in full.
However, he
dismissed claims
that his firm lacked
"escrow account" in the names of
MSC/Dantes Peak with Dubai Bank.
the financial mus­
The top management went ahead
cle to effect the
contract and in­
then to advise customers to make de­
he was in fact "do­
An attempt was then made to have
posits into this account that at some
stead charged that point accumulated to Sh244 million.
ing Mumias a big fa­ the account authorised by the board
vour" in going ahead but it was rejected.
with the contract in
Although Mumias were aware cus­
which he ended up tomers had deposited Sh244 million
losing money.
into this account, they did not cap­
"I am 100 per cent ture these transactions in the finan­
sure that I assisted Mu­
cial statements of June 30, 2013.
mias and in the process
ended up losing Sh80
million when I delivered on
my responsibility. Mumias
was to pay for the taxes and the rest,"
Ndeta said.
"I import large quantities of clin­
ker per day. So I may never have im­
ported a kilogramme of sugar but
that is a nullity because I delivered
the sugar in the time frame agreed,"
he charged before threatening to sue
The Standard in case his name was
maligned.
According to the KPMG foren­
sic audit, Dantes was selected by Fi­
nance Director Chris Chepkoit with­
out due diligence.
"It was clear that management
at MSC knew that Dantes Peak had
never imported sugar before and had
encountered challenges in secur­
ing financing for the imported sug­
ar. These two critical facts were not
highlighted to the board and in fact,
misrepresentations were made to the
board that Dantes Peak was experi­
enced in the sugar importation busi­
ness," the report states in part.
When reached by The Standard,
Chepkoit responded: "What do you
want me to do? They have written
what they have written. I have not
seen the report, so I don't know what
to say about that matter."
After the firm was unable to deliv­
er, Mumias agreed to receive less bags
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
The Standard ­ Monday
Date: 09.02.2015
Page 6,7
Article size: 829 cm2
ColumnCM: 184.22
AVE: 442133.33
Mumias Sugar Company loaders near a stored pile of sugar on June 24 2014. The company's Managing Director Coutts
Otollo assured cane transporters with existing contracts that their agreement with the company will be respected, [pho­
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya