Justice Alfred Mabeya of the High Court has ordered the prompt removal of Ponangipalli Venkata Ramana Rao as the receiver manager of Mumias Sugar Company.

In his ruling, Mabeya said Rao had not acted in accordance with the order of the court issued on November 19, 2021.

Mabeya said Rao ought to have convened a creditor’s meeting to establish the total debt the company owes which he apparently failed to do

The court also found that Rao released Mumias Sugar Company assets to Sarrai Group, which happened to be the lowest bidder at Sh5.8 billion, leaving out West Sugar Company Limited whose Sh36.7 billion was the highest bid.

The court also said Rao did not serve the interest of the farmers or creditors but rather the Kenya Commercial Bank (KCB) which appointed him.

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Mabeya also said that the receiver-cum administrator has not demonstrated how he was going to settle the debt the company owes farmers and creditors.

Consequently, the court appointed a new receiver manager, Matela Malima and cancelled the lease issued to Sarrai Group.

The court also ordered Sarrai Holdings to move out of Mumias Sugar Company.

Malima was directed to compute all assets and debts owed by Mumias Sugar Company within 60 days and file the report with the court.

Sarrai Group won the tender for a 20-year lease under which the group was expected to run the plant on behalf of Kenya Commercial Bank whose loan of Sh545 million Mumias defaulted.

However, five farmers disputed Sarrai Group’s win of the Mumias Sugar Company lease, citing a flawed tendering process, marred with improprieties, fraud and corruption.