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CMA grills Kakuzi board over UK money transfers – Business Daily

Entrance of Kakuzi PLC offices in Muranga County. PHOTO | EVANS HABIL | NMG
The capital markets regulator has extended its ongoing investigation to the board of Kakuzi weeks after grilling the firm’s top executives as it sought to understand their oversight roles during the alleged shifting of profits abroad, and conflict of interest by its majority shareholder Camellia Plc.
The Business Daily has learnt that the agricultural company’s board members have been questioned by the Capital Markets Authority (CMA) over the last few days as the watchdog gathers evidence for the transfer pricing case.
A source familiar with the proceedings said CMA wanted to know how the board members exercised their roles when the alleged profit shifting was happening.
ALSO READ: KRA starts probe of Kakuzi in tax evasion allegations
The regulator confirmed the directors had been questioned as part of investigations but declined to comment on the matter saying the case is still at the preliminary stages.
“This matter is still not finalised, it is still at the investigations stage so we wouldn’t want to comment,” CMA said. Though not unusual, the regulator has rarely gone beyond the top management in its past investigations given the fact that they are the ones involved in the day-to-day running of the business.
Reached for comment, Kakuzi declined to give its side of the story on grounds that it did not wish to engage with CMA over the media since the matter was still active.
Kakuzi has been led by an eight-member board for years with three British nationals, Graham Mclean, Christopher Flowers and Kenneth Tarplee now deceased along Ketan Shah, Nicholas Ng’ang’a, Daniel Ndonye Stephen Waruhiu and Andrew Njoroge.
Minority shareholders of the company had previously complained of being locked out of the board, which was controlled by the British company, Camellia Plc.
The multinational, by virtue of its interests in Bordure Limited and Lintak Investments, owns a controlling 50.7 percent stake in Kakuzi.
The firm only appointed its second-largest shareholder, John Kibunga Kimani, as director in 2020 after a board shakeup following allegations of human rights abuses including rape and violence at the food firm.
Board oversight roles have come under the microscope with the regulator fining members of committees under whose watch corporate governance infringements occur.
The regulator has investigated and punished Chase Bank, Imperial Bank and Real People board members along executives for failing to oversight management.
ALSO READ: CMA grills Kakuzi boss, CFO over Britain money transfers
Kakuzi’s audit and risk committee is led by Mr Ndonye and has Mr Waruhiu and Mr Ndegwa as members while the legal risk team is currently led by the chairman, Mr Ng’ang’a.
The nomination and remuneration committee that reviews board composition pay and succession is led by Mr Waruhiu with Mr Ndegwa and Mr Flowers as members.
The CMA is looking into contracts between Kakuzi and its parent company Camellia Plc, amid allegations of conflict of interest.
The regulator is also examining the financial implications of transfer pricing — whereby companies conduct transactions between different parts of the same organisation.
CMA has already questioned the chief executive Christopher Flowers, finance director Ketan Shah and general manager in charge of finance Benjamin Okiring.
Kakuzi’s principal activities include growing, packing and selling avocados, macadamia nuts, blueberries, tea green leaf and forestry products.
The company also engages in livestock farming and sale of beef. It has a presence in Murang’a county in Central Kenya and Nandi county in the Rift Valley.
Kakuzi dealings with its fellow subsidiaries were worth Sh369.4 million last year and involved Eastern Produce Kenya Limited, Robertson Bois Dickson Anderson (RBDA) Kenya Branch and Eastern Produce Regional Services Limited.
These transactions will be the focus of the CMA probe. The market regulator has stepped up surveillance of agricultural counters for irregular practices that have hurt small shareholders and farmers while benefiting majority owners.
The CMA is also investigating Limuru Tea, which is controlled by British multinational Unilever, for suspected undervaluing its 696.8-acre plantation and cooking of books as the multinational prepares to exit the company.
A source at CMA said Kakuzi was facing challenges linked to its majority owners who for a long time excluded local shareholders from the company’s board of directors.
Dr Kimani, who was raised on Kakuzi’s farms as a squatter, had previously failed in attempts to get a board seat at the agricultural firm despite owning a 32.2 percent stake in the firm worth Sh2.7 billion.
ALSO READ: Regulator probing Kakuzi on finances and governance
The changes came after law firm Leigh Day said it was representing victims to launch a legal claim in the High Court in London in 2020 against Camellia Plc for alleged human rights abuses by security guards employed by Kakuzi, its Kenyan subsidiary.
This prompted Camellia, which acquired its majority stake in Kakuzi in the 1990s, to promise reforms in the wake of the allegations that forced firms such as British retailer Tesco to suspend supplies, including avocados and macadamia nuts from the Nairobi bourse-listed company.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.