House Team Begins Uchumi Probe

A parliamentary committee yesterday started investigating the Uchumi supermarkets collapse. The Finance Committee invited its first witness, former ICDC managing director Joe Munene, who gave an account of Uchumi's financial problems and the action the board took to salvage the retail chain.

At the same time the Government, which is currently finalising the recruitment of a chief executive to work with the receivers, postponed the reopening of the supermarket chain to next week.

Trade minister Mukhisa Kituyi said in Parliament last week that Uchumi would reopen this week. Apparently, little preparation had been done, including recruiting the management team, and the creditors had not been consulted.

At the inquiry, Mr Munene tabled documents and a letter he wrote to Dr Kituyi in July 24, 2004, seeking Sh500 million to keep Uchumi afloat. A source in the committee told Nation that Mr Munene produced very useful information, adding, they will be questioning many other people linked to the Uchumi fall.

Although the committee was to meet Dr Kituyi yesterday, the minister was said to have travelled out of the country for official duties. A sub-committee had been formed to liaise with National Assembly clerk Samuel Ndindiri on other witnesses to call.

Among those to be invited from next Tuesday are the Capital Markets Authority chief executive Edward Ntalami, Nairobi Stock Exchange's Chris Mwebesa, chairman of Uchumi board Albert Ruturi and former managing director John Marstein-Smith.

Those present at the committee included chairman Oburu Odinga, Chris Okemo and Jakoyo Midiwo.

The committee also heard that a day after the Uchumi board announced that the company was insolvent, the Kenya Commercial Bank ordered that a receiver takes over the supermarket.

Immediate payment

At the time, Uchumi owed KCB Sh511 million. A letter from KCB relationship manager, Mr John Kamiri, said: "Unless we receive immediate payment of the amounts so due, we shall, without further notice appoint a receiver(s) or receiver/manager(s) over the property and assets charged in favour of the bank by the debenture."

In its letter to to the Capital Markets Authority a day before it close doors, Uchumi board said despite the rights issue where it collected Sh1.2 billion, it failed to implement its business plan. Although the business picked up in the months of November and December, it failed to pick up because of high cost of money borrowed from banks, high overheads and inability to win back customers who had defected to other supermarkets.

On Sunday, Mr Munene said the Government had fully been briefed about the imminent collapse of Uchumi supermarket long before it folded up on June 1. He said a top Government official attended a meeting on May 30, in which Uchumi's closure was discussed and ratified. In addition he and the board had met Dr Kituyi and even wrote a letter to him about the supermarkets financial problems two years ago.

Elsewhere, Government spokesman Alfred Mutua announced that Uchumi will start operating next week.

Dr Mutua said a new Uchumi CEO to be appointed soon will work with during his weekly press briefing, will work with the receivers during the supermarket's revival.

Speaking during his weekly Press briefing, Dr Mutua said the Government was head-hunting for a CEO of high integrity, credibility and competence. He said an agreement between creditors and Government was being finalised to enable the supermarket resume operations.

Hopes for the reopening of Uchumi were dashed after it emerged that the PTA Bank, a key creditor, was yet to approve a rescue plan for the fallen retailer.

Suppliers and landlords

Three candidates to steer the turnaround have already been identified by a taskforce comprising the Government and Uchumi creditors, suppliers and landlords.

A top Caltex executive, George Njenga, tops the list of the possible Uchumi's new CEO.

Although Dr Kituyi had promised to have the retail chain reopened yesterday, his permanent secretary David Nalo said the PTA Bank had not endorsed the supermarket's rescue plan. But KCB, another major creditor, had given a nod.