JUDICIARY/FILEA group of sugar suppliers has moved to court seeking compensation of Sh173.6 million, which they claim is owed by three State-owned sugar companies whose assets and operations have since been leased to private entities.
The petitioners, Chebaibai Traders Limited, Lesphine Investments Limited and four others, claim the State Department of Agriculture leased the assets and operations of the three sugar companies through International Tender No. MOALD/SDA/IT/001/2024-2025 without taking into account existing contractual obligations arising from the supply of goods.
According to the petition, the suppliers are owed a total of Sh173,580,487 for goods supplied to the respective State-owned sugar companies.
They argue that the lease arrangement has left them without an effective avenue to recover the money, claiming the companies that incurred the obligations have effectively been stripped of their operational assets.
The petition further states that the department facilitated the handover of the assets and operations to other entities under what the petitioners describe as opaque corporate arrangements that have not been made public.
The petitioners contend that assets in which they have a financial interest were transferred to third parties without their contractual obligations being settled.
“The upshot of this lease arrangement is that the property of the Petitioners contained in the assets of the 8th, 9th and 10th Respondents has been handed over to third parties by the state without any hope of compensation,” part of their filings state.
The suppliers argue that the affected sugar companies have effectively been reduced to shell companies, making it difficult for them to enforce existing contracts or recover losses arising from the alleged breach of those agreements.
They have asked the court to declare that the international tender violated their property rights because of the outstanding payments they claim remain unpaid.
The petitioners are also seeking "a declaration that the Petitioners have a cognizable property interest in the assets that are leased under the tender," and an enforceable property right over proceeds generated from the lease agreements.
They want the respondents held jointly and severally liable for the Sh173.58 million principal amount, as well as loss of profits and interest arising from the alleged actions surrounding the lease arrangement.
The suppliers have further asked the court to issue orders barring the State Department from collecting proceeds from the lease contracts until the obligations they claim are owed are fully settled.
They are also seeking orders restraining the entities that took over the sugar companies' assets and operations from dealing with those assets until the suppliers' claims are determined.
The petition seeks the court's determination on disputes arising from the State's restructuring and leasing of assets belonging to the State-owned sugar companies.
