How Nakumatt directors siphoned Sh1bn

Mr Atul Shah, who was among the two individuals listed as directors of the company. FILE PHOTO | NMG 

In Summary

• 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.
• 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.

By ANNIE NJANJA
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By VICTOR JUMA
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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.

The amounts owed by insiders, which did not attract interest charges, had dropped to Sh948 million as of February 2018, the period for which the latest financial records are available.

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