The dreams of controversial businessman Julius Mwale of taking over the operations of Mumias sugar has been dealt a blow after his spanner boy and puppet Pongangipalli Venkata Ramana Rao lost the privilege of being the receiver manager. Rao who’s a scrap metal dealer, is known for handling dead companies then work with scrupulous businessmen in the pretext of takeover while intention is selling scrap metals.
Kenya’s corporate market has in recent past seen several companies opt for liquidation procedures after running out of funds to cover any remaining debts.
Surprisingly, one name has dominated the scene over these years. Ponangipalli Venkata Ramana Rao has become a dominant player, acting as a receiver manager for over half of companies currently fighting liquidation challenges.
Rao is on record admitting selling scrap metal to Devki Steels Mills Ltd while he was at Kwale Sugar Factory but denied having sold a commercial project to Devki.
The admission by Rao followed probe on the failed leasing bid by Devki that also faulted Rao for failing to publicly advertise the leasing process of the troubled miller the manufacturer eventually pulled out from the Sh5 billion takeover deal. Activist Okiya Omtatah recently moved to court seeking to have Ponangipalli Venkata Ramana Rao removed as the Receiver Manager of Mumias Sugar Company.
He wants Rao removed by KCB Bank, which put the miller under receivership, on grounds that he is conflicted and incompetent in running the company.
“I seek a declaration that the KCB Bank Kenya Limited, the Receiver which appointed him, has an obligation to remove him to protect the public interest in the Mumias Sugar Scheme,” Omtatah states in court documents.
To his prayers, Rao has been kicked out. Pan-African lender Ecobank and French development financier Proparco have seized the prime assets of Mumias Sugar Company from KCB Group, setting the stage for a vicious court battle that could throw the planned leasing of the ailing miller into disarray.
Ecobank filed a notice on November 29 with the Attorney-General’s office indicating it had hired Harveen Gadhoke, as its receiver manager in a forcible takeover of Mumias Sugar’s ethanol plant.
Proparco, in what appeared like a coordinated fashion, filed a similar notice on the same day, claiming rights to the sugar miller’s power generation plant.
The two plants together with Mumias Sugar’s milling unit have been under KCB appointed receiver-manager — Pongangipalli Venkata Ramana Rao — since the miller was placed under receivership in September 2019 to protect its assets and maintain operations.
This means that Mumias Sugar has three receiver managers in a new turn that looks set to derail the leasing of the firm.
The sugar miller has received revival bids from a number of investors, including businessman Julius Mwale, steel tycoon Narendra Raval and billionaire Rai family.
Ecobank reckons it lent Mumias Sugar Sh2 billion for the ethanol plant while Proparco says it is owed Sh1.9 billion for the power generation plant, built in an income diversification move.
Other creditors protested KCB’s sole right over the miller, arguing that Mr Rao was running the plant without their input despite the Kenyan bank being owed Sh545 million by Mumias Sugar.
Justice Alfred Mabeya ruled that Mr Rao would be answerable to all the parties owed by Mumias Sugar through a creditors committee. The miller’s loans stood at Sh12.5 billion at the end of June 2018, including Sh401 million to NCBA Bank.
Lawyer Jackline Kimeto moved to court in March 2019 seeking to liquidate the company because she argued that it was insolvent as it could not pay her debt of Sh76 million.
The court ruling and assets takeover will affect the planned leasing of Mumias Sugar, which must now receive the backing of the top creditors.
Under the initial leasing deal, the successful firm was to run the plant on behalf of KCB for up to 25 years and pay the lender monthly leasing fees.
Mr Mwale placed the highest bid of Sh27.6 billion for the leasing.
Mr Raval, through his Devki Group, offered Sh8.4 billion while Rai, under his West Kenya Sugar, offered Sh3.5 billion.
The new development that had given Mwale a clear lead now throws him back to the drawing board as the new entrants will want a thorough handover process looking into the transparency of the finances and not promises that Mwale has anchored his takeover on.
Mwale has been accused of having shadow financiers putting the recovery in uncertainty as his city project lay idle and an example of how Mumias would eventually lay.
In 2019, Mwale claimed to have used Ksh19 billion to build a shopping center, hospital, homes, golf course, power plant, 150 kilometers of road and an airport within the medical facility.
What was once looked like a village paradise is now collapsing rapidly, with a number of contractors, suppliers, traders and vendors complaining that Julius Mwale MTC owes them millions in unpaid bills.
In 2018 Mwale was accused of issuing bad checks to contractors, amounting to Ksh 22 million.
Mwale’s path with honesty has never been straight, the former air force soldier has lied of running away from Kenya to the U.S. selling a narrative that he clashed with seniors over a technology he held.
He had worked with Kenya Airforce after joining the Armed Forces Technical College for a telecommunications engineering degree.
Army authorities would later dismiss the reports, claiming Mwale was fired for being absent without permission (AWOL).
“It was during this training that he was absent without leave (AWOL) on May 27, 1999 at 8:00 am. He has therefore never been qualified or graduated as a radar technician or as an aeronautical engineer as he has previously stated ”, reiterated the spokesperson for the KDF, Colonel David Obonyo.
It is reported that Mwale enrolled in a Masters in Electrical Engineering in 2003 as “Special Admission to Columbia University”. It is not yet clear how he could enroll in a master’s degree with a diploma certificate.
Silently, Mwale went to seek asylum in the United States for nine years, after which he returned in 2009 as president and chief strategy officer at SBA Technologies Inc, a multi-million dollar company.
In 2010, Julius Mwale announced that his company, SBA Technologies, planned to list 10 percent of its shares on the New York Stock Exchange, NASDAQ.
Unknown to many, before coming to Kenya, Mwale and his company SBA Technologies were sued in the United States for failing to honor the “unconditional warranty agreement” totaling $ 159,000 (approx. 16 million Ksh).
It’s not only in Kenya where Mwale sold his own villagers a snake oil and now an idle city in Kakamega, in Senegal, he did the same with Akon who’s an equally corrupt and dishonest character. Mwale was named as the lead investigator in the futuristic city.
A year after singer Akon laid the first stone of the $6 billion futuristic city he vowed to build for his native Senegal, the site remains grassland.
The stone itself sits at the bottom of a dirt track in a field; a small placard advertising the megaproject has fallen off it.
As the Mumias takeover goes on the next phase, the big question is, in whose hands will Mumias Sugar Company be safe in?