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How Nakumatt directors siphoned Sh1bn

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Atul Shah, Nakumatt former CEO.

Nakumatt Holdings had lent its directors more than Sh1 billion in interest-free soft loans by the time it was placed under administration on January 22, 2018, according to a review of the company’s financial statements.

The related party transactions were recently disclosed in a report for the year ended February 2018 by Parker Randall Eastern Africa, the retailer’s independent auditor.

The auditor did not specify which individuals owe the company money, underlining the weak governance in the board of the former giant retail chain that owes banks, landlords and suppliers as much as Sh20 billion.

Nakumatt’s founder and former chief executive Atul Shah was among the two individuals listed as directors of the company as of the report date.

“Significant in this net balance is Sh948 million due from the directors. These receivables are not supportable based on the available evidence,” reads part of the report.

“The amounts due from a director are interest free. They relate to short-term advances through a current account.”

LOOSE GOVERNANCE

The loans to the company’s directors are among a series of related party transactions amounting to Sh2.8 billion, which are unlikely to be recovered.

Others include amounts claimed from subsidiaries in Uganda, Rwanda and Tanzania, which ceased operations.

The administrator has written off Sh1.5 billion or 53 percent of the receivables, leaving a balance of Sh1.3 billion.

“There are no repayment plans for these balances; the companies frequently lend and borrow funds from each other,” the auditor said.

The report paints a picture of relatively loose governance at Nakumatt relative to other firms such as banks where insider dealings are more closely regulated.

There is a limit on the size of loans directors and employees of a bank can take in aggregate. The loans also typically attract interest charges, though sometimes at below market rates.

Revelations of Nakumatt’s insider loans come at a time when the retailer is closing most of its remaining branches, making compensation for creditors even less likely.

Mr Shah faces investigations over the loss of Sh18 billion worth of stock.

Nakumatt administrator Peter Kahi said a forensic investigator will probe why Mr Shah wrote off stock worth Sh18 billion in May 2018, before the company ground to a halt.

The High Court granted Nakumatt Supermarkets protection from its creditors, allowing the retailer to go into voluntary administration. The company sought protection using Kenya’s newly enacted company laws, which provide a path for distressed firms to avoid complete collapse. At its height, the company, which began life as Nakuru Mattresses, had more than 60 outlets across Kenya, Uganda, Tanzania and Rwanda.

But its financial problems have led to empty shelves and store closures, opening the way for foreign retailers like Carrefour and local rival, Naivas, to take over space being vacated by Nakumatt.

 

Source: www.businessdailyafrica.com

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Health Insurance Firms Reject Exaggerated Nairobi Women’s Hospital Bills

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Health insurers will not honour future bills from the Nairobi Women’s Hospital, officials said on Tuesday, in a move likely to worsen the woes of the facility currently fighting claims of cost inflation.

Mr Tom Gichuhi, the Association of Kenya Insurers (AKI) chief executive said that the underwriters held a meeting on Monday evening and resolved to take the drastic measure.

“Medical insurance underwriters met and resolved not to deal with the facility in future. By Tuesday it had not been actualised, but I am certain that it will happen,” he said. A communication manager in at aninsurance firm who wished to remain anonymous said that patients currently admitted at the hospital would not be affected.

The news comes after the hospital’s board of directors issued a statement saying it had commenced an internal investigation into claims that its doctors force patients to undertake unnecessary procedures.

The board said it was also cooperating with the Kenya Medical Practitioners and Dentist Council, which is also conducting an independent investigation.

“We have noted with a lot of concern reports appearing in various media platforms suggesting that there is some systematic approach by the hospital to unfairly generate revenue from patients.

“Although we don’t believe this is the case, and in fact it is antithetical to our foundational principles, we take these allegations very seriously and are conducting an internal review as well as cooperating with the Kenya Medical Practitioners and Dentist Council as they carry out their independent review.”

The medical council CEO, Dr Eva Njenga said that they would reveal their findings within a month.

Leaked WhatApp chats appear to show how the hospital bosses set daily targets for the number of patients who should be admitted. They show that the revenue, commissions, admissions and discharge numbers were allegedly being actively monitored hourly, every day, and day and night by chief executive officer, Dr Felix Wanjala.

To do this, the CEO recommended that his team, based at the Nairobi Women’s Hospital branch in Nakuru (called Nakuru Hyrax) should “start with looking for referrals”, not miss “any opportunity (to admit)”, and be “very vigilant in casualty”.

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Uhuru Opens Cement Factory in Nakuru to create 1,000 Jobs

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Simba Cement Factory in Nakuru

President Uhuru Kenyatta on Tuesday presided over the opening of a Ksh.5.8 billion cement factory in Salgaa, Nakuru County that is set to change the economy of the area.

The Simba Cement factory that will create 700 direct jobs is set to boost the construction sector by enhancing availability of cement at affordable prices. The factory is still being expanded and will employ a further 300 Kenyans by June this year bringing the total direct jobs created to 1000.

Speaking to area residents, employees and invited guests, the President urged companies involved in the construction industry to leverage on the low cement prices offered by the processor to expand their enterprises and assured that the Government is keen on attracting more factories to the region.

Devki Group Chairman Narendra Raval said his factory is selling cement at Ksh.530 in Nakuru and its environs down from Ksh.750.

President Kenyatta said Salgaa is already home to four factories and attributed to the changing fortunes of the area to Devolution, saying areas that were previously considered economically barren are now new centres of growth.

He said the Government will continue to support investments that utilise local resources to create wealth and employment opportunities for Kenyans across the country.

“My administration will support value addition, extraction industries and manufacturing and we will continue supporting investments targeting the economic base of each county,” the President assured.

The Head of State said the Government will keep investing in capacity building for local industries to enable them get a share of the ever expanding international market for Kenyan products.

Petroleum and Mining Cabinet Secretary John Munyes said the demand for cement is very high in the country and also in the region especially in South Sudan and Southern Ethiopia.

CS Munyes noted that Kenya is endowed with huge reserves of limestone and other raw materials used in the manufacture of cement and called for more private sector investments in the sector.

Nakuru Governor Lee Kinyanjui said Salgaa is transforming into an industrial hub adding that the County Government was in the process of zoning it off as an industrial area.

Devki Group chairman said the Salgaa cement factory has an installed processing capacity of 750,000 metric tonnes annually. He said plans are underway to double the installed capacity going forward.

As part of the cement processor’s corporate socially responsibility, the Devki Group announced that they are supporting Kenyatta National Hospital (KNH) to construct a cancer centre at a cost of Shs 300 million and donated Shs 100 million to KNH officials.

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Kenyan woman, 26, sets up country’s first digital car insurance company

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Jihan Abass, founder and CEO of Griffin Insurance, speaks during an interview with Reuters as they prepare to release their flagship digital-only car insurance company, in Nairobi, Kenya January 24, 2020.

Jihan Abass, a 26-year-old Kenyan woman, often walks into meetings full of puzzled faces as people crane past her looking for the boss of her new digital motor insurance company.

“They would be surprised to see that it was actually me,” said Abass from her bright office in Nairobi, where almost every wall is covered in dry-erase marker scrawls.

Abass is founder and CEO of Griffin Insurance, which released its flagship mobile application on Friday. Griffin is Kenya’s first digital-only car insurance company, which lets customers pay in instalments and pause coverage if they travel abroad. Griffin will process claims in a week rather than the industry standard of 30 days, she said.

“It allows you to buy your insurance policy in less than two minutes,” said Abass.

In addition to the app, Abass’ 14-person team has another company, Lami, that sells the technology platform used to build Griffin so other businesses can use it to create their own digital insurance products.

Lami raised half a million dollars in seed funding and aims to close a further funding round by March.

Abass, who grew up wakeboarding in the Indian Ocean at the weekend, always wanted to work in business. After graduating from university in London in 2015 she became a sugar trader and was one of a handful of women in the business, just as she is now.

Nairobi, a technology hub nicknamed “Silicon Savannah,” has attracted many entrepreneurs from places like the United States and United Kingdom.

“A lot of the CEOs here are not only men, but also foreigners,” Abass said. “You don’t really see faces like mine.

NAIROBI (Reuters)

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