Corporate News
The Pan African Paper Mills in Webuye town. PHOTO | FILE
By EDWIN MUTAI, emutai@ke.nationmedia.com
In Summary
Taxpayers lost Sh1 billion that the government used
to revamp Pan-Paper Mills before it was sold for Sh900 million, a
parliamentary committee has said.
Parliament’s Public Accounts Committee (PAC) has concurred
with Auditor-General Edward Ouko’s assessment that money sunk in the
Webuye-based paper mill “was a waste of public resources as partly
demonstrated by the audit query.”
“The company has now been sold off for Sh900
million, way below its valuation,” Nicholas Gumbo, who chairs PAC, said
in a report to the House.
In April this year, the billionaire Rai family
announced that it had bought the collapsed mill for Sh900 million,
paving the way for reopening the factory which closed shop in 2009.
Jaswant Rai, the chairman of the business group, told the Business Daily
that they had acquired the company and would revive it within the next
few months. The family announced then that it would pump Sh6 billion
into the mill over a five to 10 year period.
In 2010, then President Mwai Kibaki held a
colourful ceremony in Webuye during which he switched on factory
machines to signify revival.
But the factory was shut down shortly after even
though the government had pumped in Sh1.2 billion to revive it and pay
off lenders who had placed it under receivership.
Mr Ouko questioned the value to taxpayers of the
Sh1 billion used to revive the factory before it was shut down and
subsequently sold below its valuation.
PAC has also recommended the immediate prosecution
of top officials in the Industrialisation ministry who orchestrated the
loss of Sh6.4 million during the mill’s revival in 2010.
The committee wants Director of Public Prosecutions
Keriako Tobiko to charge officials who fraudulently approved payments
to a wrong company instead of a firm that supplied 20,000 kilos of
production material to Pan Paper.
Mr Ouko said during the 2011/2012 financial year,
the ministry contracted a vendor to supply 32,160kg of production
materials — polymer (Aquafloc 10 1085) to Pan Paper Mills Ltd at a cost
of Sh10,296,346. On March 19, 2012, the vendor supplied and delivered
20,000kg of the material valued at Sh6.4 million and invoiced the
ministry accordingly on March 12, 2012 and subsequently, the payment was
processed on May 28, 2012.
But the ministry transferred the money through its
Central Bank of Kenya account to another company through a Barclays Bank
account.
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