KPCU Board claims control

January 4, 2010
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, NAIROBI, Kenya, Jan 4 – The Board of Directors of cash-strapped Kenya Planters’ Co-operative Union (KPCU) now says they are still in control of the company pending a court ruling in a case in which they are challenging being placed under receivership.

Addressing journalists in Nairobi, KPCU board Chairman Kimathi Mutuerandu said they had obtained a court order that allowed them to resume control of the coffee marketing firm.

Kenya Commercial Bank placed the organisation under receivership in October to recover a Sh644 million debt and appointed Deloitte Consulting Limited as the receiver managers.

“We have a filed a constitutional case in court explaining the circumstances in which KPCU finds itself now,” Mr Mutuerandu said.

Since being placed under receivership, KPCU management has not had access to the company’s accounts, rendering it inefficient.

“Our workers have also gone unpaid for the last three months since we have not had access to our accounts to be able to pay them,” Mr Mutuerandu said.
The impasse has also caused a delay in payment to farmers who are now owed close to Sh150 million.

KPCU also owes Coffee Board of Kenya Sh200 million, as well as another Sh200 million owed to the Kenya Roads Board and the Coffee Research Foundation.
Mr Mutuerandu appealed to the government to intervene in the matter to salvage the situation.

“We are losing our customers to our competitors,” he complained.  The tussle between the KPCU board and the receiver managers is likely to minimise the company’s market share, which was at 8.5 percent in 2009.

The government is however said be mooting the receivership idea, as it would give it a bigger controlling stake in the company.

Co-operatives Minister Joseph Nyaga has in the past said it would pave way for implementation of a rescue plan, to set the company on the path of recovery.

The genesis of KPCU’s problems is traced to its dual registration – first as a co-operative under the Societies Act then as a limited liability company under the Companies Act.

A study commissioned by the European Union recommended that the structural organisation of the company be changed. This would allow it to concentrate on milling and warehousing, and register other subsidiary companies with separate accounts to streamline management.

KPCU represents over 300 cooperative societies and about 2,000 estate farmers.

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