Raila to sue Ruto on Mumias debt claims
Mr Odinga’s threat to go to court came as it emerged that a firm with which his family is associated, Spectre International, was among 13 companies that Mumias had instructed its lawyers to recover millions of shillings from.
Gakoi Maina & Co Advocates wrote to Spectre last October asking for Sh33,960,797, which it described as a “long standing debt”.
Sugar is currently a hot political issue in Kenya after Mr Odinga accused President Uhuru Kenyatta of signing a trade deal to allow the importation of the commodity from Uganda in exchange for the export of milk to the neighbouring country.
On Sunday, Mr Odinga’s lawyer Paul Mwangi argued that the move to link the ODM leader to Mumias’s problems was “politically motivated”.
“All these claims are politically instigated. They want to link him personally to the problems facing Mumias Sugar Company in order to bring him down politically. That is why tomorrow we are moving to court to file a suit,” he said on the phone.
Mr Mwangi argued that claims of Spectre International owing the ailing sugar firm money in terms of delivered molasses was meant to stop Mr Odinga from raising questions about the economic rationale of President Kenyatta’s deal with his Uganda counterpart, Mr Yoweri Museveni, to allow importation of cheap sugar.
“The matter is being directed to Mr Odinga for him to stop questioning the sugar importation deal. They want him to stop raising issues regarding the sugar deal with Uganda,” he said.
The demand letter says Spectre International bought molasses from the sugar firm on credit between March 2012 and April 2013, with a promise to pay within 30 days.
“A sum of Sh33,960,797.28, being the final amount is overly due and outstanding in respect of the purchased sugar facilities whereof supplied to you. The said debt has been long outstanding since the expiry of the 30 days from the date of purchase, particulars whereof are within your knowledge and possession,” it said.
The law firm said that unless Spectre paid the outstanding debt within 21 days from the date of the letter, they would go to court seeking to wind it up.
“Due to your default and/or refusal to settle the outstanding sums a default has arisen which under the provisions of Sections 220(b) of the Companies Act Chapter 486, laws of Kenya entitle our client to petition the court for winding up the company due to inability to pay its debt and consequently obtain a winding up order against you,” it said.
NEVER GONE TO COURT
Exchanges between Mumias Sugar and the law firm seem to indicate that by February, Spectre International had not paid the money. Twelve other entities, which owed the sugar firm, had also not paid.
Other firms which were to be sued by Mumias were Otifer Logistics (Sh36.6 million), Petmark Distributors (Sh11 million), Cups Limited (Sh9.6 million), Uchumi Supermarkets (Sh7 million), Abgro Chemicals and Food Company (Sh1.7 million), Ukwala Supermarkets (Sh3.15 million), JM Shake (Sh1.06 million), Rongai General (Sh6.58 million), Millennium (Sh5.58 million), Morganite (Sh3.8 million), Domma Stores (Sh2.28 million) and Yatin Supermarket (Sh346,500).
However, Mr Mwangi questioned the motive behind the letters, arguing that the law firm has never gone to court against Spectre International over the alleged debt. He also said there was another letter dated 2013 that was being circulated.
“One has to question why the letters are circulating now. You wonder how a company instructs a law firm in 2013 to write a demand letter and a year later instructs a different law firm to file another demand letter. If there had been a genuine legal claim, a suit in court, the company would have acted,” he said.
Mr Odinga and Mr Ruto have been involved in a heated exchange since August 11 when President Kenyatta is reported to have agreed with President Museveni to remove Kenya’s non-tariff barriers against Ugandan sugar.
The Cord leader has argued that the deal would “kill” the ailing sugar factories and impoverish cane farmers. He has embarked on a series of rallies to push for the cancellation of the deal.
For his part, Mr Ruto has accused the former Prime Minister of being behind the collapse of the sugar industry and alleged that Mr Odinga’s firm owes Mumias money.
On Sunday, Mr Odinga’s elder brother, Nominated MP Oburu Oginga, denied that Spectre entered into any loan agreement with the sugar firm.
He said the board had agreed that they deal with Mumias on a cash basis, and any such transaction was to be guaranteed by a bank before supplies were delivered.
He could not confirm or deny that they received a letter from a law firm. “I cannot tell if there are letters to the effect of a debt owed to Mumias. It’s normal for businesses to write to one another but our commercial agreement with the miller did not have any credit facility attached to it,” he said.