Efforts to revive the ailing Nakumatt Supermarket chain, are being hampered by its association with former Kilome MP Harun Mwau, a parliamentary committee was told on Wednesday.
The Senate Committee on Tourism, Trade and Industrialisation was told that many strategic partners had approached the court-appointed Nakumatt administrator to explore a possible deal but changed their minds at the mention of the politician.
“Strategic partners have been coming. They are still coming but once you mention Mr Mwau, they just go away,” Mr Peter Kahi, the administrator, told the committee.
Mr Kahi, who was picked by the court to try to and save the chain from collapse due to huge debts further revealed that Mr Mwau had worsened the efforts to save the supermarket chain by demanding Sh7 billion. The company owes different entities, including government agencies, to Sh40 billion.
STOCKS WORTH SH8.6BN
Mr Mwau had shares in Nakumatt but sold them to Mr Atul Shah at a cost of Sh7 billion before it ran into bad times.
The committee, chaired by Kirinyaga Senator Charles Kibiru, heard that Mr Mwau had called and demanded to be included in the payout plan, but Mr Kahi got cold feet when he discovered that the debt was not captured in the books of accounts he inherited when he came in as the administrator on January 22.
Four banks —Diamond Trust, Kenya Commercial, Standard Chartered and Bank of Africa —are owed Sh8.6 billion; short- term note holders Sh4.8 billion; suppliers and landlords Sh18.5 billion; employees Sh1.3 billion) as salary arrears from July 2017 to January 2018; the Kenya Revenue Authority (Sh2.5 billion); and other creditors (Sh1.1 billion).
However, Mr Kahi said the KRA had given him up to April 2019 to clear its debt.
Mr Kahi told the committee that what he inherited in the books of accounts does not match the situation on the ground. He said stocks worth Sh18 billion was not on the shelves, yet records indicate that it was received.
“I am trying to get money to conduct a forensic audit. There are rumours that most of this stock was siphoned out; the directors claim that they wrote it off. But this is not the kind of money that can be written off just like that,” he said.
RAPID EXPANSION
Asked by Senators Jones Mwaruma and Mwangi Githiomi what ails the chain, Mr Kahi said the model on which the supermarket chain operates is unsustainable since the cash flow is concentrated in expansion.
“Other than the brand name, the supermarkets own nothing. They thrive on the brand as they own no assets, even the stock is supplied and paid for after it is sold. Depending on the landlord is not good. This model should be reconsidered,” he said.
Citing Uchumi as another example, he pointed out that rapid expansion and lack of long-term funding strategies were to blame for the frequent collapse of supermarkets since they often use suppliers’ money to expand.