How Victoria Commercial Bank contributed to money laundering and tax evasion in Mumias Sugar Saga –

The future of the ailing Mumias Sugar Company hangs in the balance with numerous legal battles challenging its lease to a private entity. Amid the protracted dispute over the takeover of the miller, allegations of money laundering and tax evasion have surfaced, further exposing the intrigues behind various companies’ attempts to control the assets of the once giant sugar company. popular.

In documents seen by Kahawa Tunguthe Victoria Commercial Bank was allegedly involved in money laundering in the Mumias Sugar saga.

Mumias was placed in receivership by the Kenya Commercial Bank (KCB) in 2019 to protect its assets and maintain its operations.

Miller owes KCB and several other creditors over Ksh 29 billion.

KCB placed the sucker in the hands of Ponangipalli Ramana Rao in a resuscitation plan.

The documents in our possession show how some of the assets of Mumias which had obtained loans from Eco Bank and the French development agency Proparco were transferred from the two banks to the Victoria Commercial Bank in the context of a suspicious transaction which raised eyebrows.

The two assets, the cogeneration plant and the ethanol, valued at Ksh 1.9 billion and Ksh 4 billion respectively, later ended up with the Dubai-based company Vartox Resources Inc.

In transferring the assets, the parties ignored an inter-lender agreement signed on September 27, 2010.

The agreement details the exclusion of the two syndicated assets from the lender’s existing collateral.

The agreement required each lender to notify the other parties “of any modification, termination, amendment and transfer of any security”.

Other lenders involved in the deal include Barclays Bank and Stanbic Bank.

“If a lender wishes to release its security, it will notify the other lenders before assigning the release…A consultation notice will be sent to all lenders for a period of 10 working days,” the agreement states.

Contrary to the agreement, Proparco and Ecobank proceeded to assign their right to Victoria Commercial Bank on October 4, 2021, without notice to KCB, Barclays Bank or Stanbic.

Interestingly, the transactions took place when the receiver-manager was engaged in the process of leasing for the survival of the sugar business.

Besides Victoria Commercial Bank’s investment in defining non-performing assets (NPA) contrary to banking law, the source of funds to pay Proparco and Ecobank also raises questions.

READ: Mumias’ former giant sugar company is now in ruins (Photos)

The rental lease would also give more than their value for consideration, a decision seen by experts as an act to avoid corporation tax.

The manner in which Victoria Commercial Bank, which is one of the smallest banks in the country, acquired assets of $45 million and Ksh 800 million is also suspicious.

Similar issues also arise in the transfer of the assets in question to Vartox Resources Inc as no notice was given to the listed lenders upon the execution of the sale.

The name of the director of Vatrox Resources Inc, Kristian Khachatourian, appears in the Panama leak papers, pointing to a classic case of money laundering.

Khachaturian is listed as a shareholder of Jankle Group Limited in the giant leak of over 11.5 million financial and legal records that expose a system that enables crime, corruption and wrongdoing, hidden by secretive offshore companies.

READ: How the Rai family scuttled the dream of reviving Mumias Sugar Company through politicians

In a conflict of interest case, we have also established that Anjarwalla & Khanna Advocates represented a number of parties in the saga.

Anjarwalla & Khanna Advocates was involved in the transaction between Eco Bank, Proparco and Mauritian-owned Victoria Commercial Bank. The law firm represents Jaswant Singh Rai, the chairman of Rai Group, which is among the firms fighting against the hiring of Mumias to Sarrai Group, a company associated with his younger brother Sarbi Singh Rai.

Anjarwalla & Khanna Advocates is also representing West Kenya, which was the highest bidder in Mumias’ disputed lease to Sarrai Group, which is headquartered in neighboring Uganda. Jaswant is notably a shareholder of Victoria Commercial Bank, via a Mauritian company managed by Anjarwalla & Khanna.

READ: 27.6 billion Ksh: Amount offered by ex-military Julius Mwale to acquire Mumias Sugar

The law firm also represents Vartox, the firm headed by Khachaturian. Sonal Sejpal, a partner at Anjarwalla & Khanna Advocates, is said to have played a leading role in the Mumias Sugar asset transfer saga.

Vartox recently filed a lawsuit blaming Rao for ignoring the highest bidder, West Kenya Sugar, and instead awarding the contract to the third-lowest bidder.

The receiver-manager previously told the court that he withdrew the West Kenya Sugar Company from bidding because of a conflict of interest.

According to Rao, West Kenya has a factory located 36 kilometers east of Mumias and harvested 50% of the sugar cane in MSCL territory.

READ: New twist in Mumias takeover as Ugandan firm gets green light to continue operations

Amid the conspiracy, it has now emerged that western Kenya’s struggle to take control of Mumias is part of a plot to rob the miller.

Major players now want the Central Bank of Kenya (CBK), the Kenya Revenue Authority (KRA) and the Financial Reporting Center to investigate Victoria Commercial Bank, Anjarwalla & Khanna, Eco bank and Proparco for money laundering, tax evasion and various frauds and rescue Mumias Sugar assets from fraudsters to avoid asset stripping.

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