CMA grills Kakuzi boss, CFO over Britain money transfers – Business Daily
Kakuzi Plc Managing Director Chris Flowers. PHOTO | DIANA NGILA | NMG
The Capital Markets Authority (CMA) has questioned the chief executive and finance director of listed food producer Kakuzi over allegations of shifting profits abroad and conflict of interest by its majority shareholder Camellia Plc.
Kakuzi CEO Christopher Flowers, finance director Ketan Shah and general manager in charge of finance Benjamin Okiring have been contacted by the CMA in recent days, three sources familiar with the probe told the Business Daily.
The CMA says its probing 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.
Kakuzi declined to comment on the matter, saying it was engaging directly with the regulator. 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.
“Together with Mr Chris Flowers, the three have been interviewed in the course of the last three weeks,” said a source at the CMA who spoke to the Business Daily on condition of anonymity. 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 Muranga County in Central Kenya and Nandi County in the Rift Valley.
“Camellia Plc is the ultimate parent of the group. There are other Camellia Plc group companies that are related to Kakuzi Plc through common shareholdings,” says the firm in its 2021 annual report.
“Fellow subsidiaries within the Camellia Plc Group act as brokers and managing agents for certain products and operations of the group.”
The Kakuzi dealings with its fellow subsidiaries was 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.
“The Group transfer pricing policy gives guidance on related party transactions, which are carried out using the arm’s length principle,” Kakuzi says in the annual report.
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 probing 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.
The source at the 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. Kakuzi only appointed its second-largest shareholder, John Kibunga Kimani, as a director in a board shake-up that followed allegations of human rights abuses, including rape and violence.
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 company worth Sh2.7 billion.
The changes came after law firm Leigh Day said that 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 like British retailer Tesco to suspend supplies, including avocados and macadamia nuts, from the Nairobi bourse-listed company.