Two more Uchumi managers quit

The resignation of two more senior executives of cash-strapped retailer Uchumi Supermarkets has cast a dark cloud on the government’s attempts to revive the chain.

Mr Murugi Muchunu, the head of Revenue Protection and Mr Alex Kagua, the Finance Manager in charge of Reporting, are serving their notices.

Saturday Nation has learnt that Mr Muchunu’s notice ends at the end of this month, while Mr Kagua will leave the retailer mid next month.

Their departures follow those of Chief Operating Officer Willy Kimani who left in June, and Chief Finance Officer Vincent Opiyo who returned to his former employer Safaricom at the end of last month.

These executives were part of a team brought in to revive the ailing chain which is waiting for an injection of Sh1.2 billion in public funds approved this month by the Cabinet.

Sources at Uchumi blamed the departures on a group of suppliers whose influence has been growing under the reign of new chief executive Julius Kipngetich and who are said to be putting pressure on senior managers.

But Mr Kipng’etich on Friday sought to assure the public that everything was overboard and that those leaving were managers who were reacting to the “painful reform agenda” he had instituted.

He defended one of the suppliers saying the company had loaned a lot of money to Uchumi.

“We didn’t have money and these guys came in with the money. They were approved by the board. This is a public quoted company,” he said.

He said he will not go back on the reforms and asked those aggrieved to go to court.

“It is an open market, staff are open to joining or leaving depending on opportunities that are available to them in the market,” Mr Kipng’etich said.

He said because of low supplier confidence, Uchumi came up with a stop gap measure to obtain stock on cash basis.

However, the liquidity challenges at the company prevented continuation of this arrangement. This led to the engagement of the supplier as a stock financing partner, Mr Kipngetich said.

SYSTEMIC PLUNDER

The government has accused sacked CEO Jonathan Ciano of mismanaging the retailer and has said it has enough evidence to take those responsible to court.

A forensic audit report conducted by the audit firm KPMG revealed that Mr Ciano and his chief finance officer Chadwick Okumu presided over a systematic plunder of the supermarket chain.

(READ: Uchumi suspends search for investor, bets on Sh1.2bn State fund)

Dodgy transactions included questionable procurement of goods and services, deals with financiers, and fraudulent payments to suppliers.

Sources at Uchumi now say that the new regime could be repeating the same mistakes.

A company brought in by a top manager six months ago to run the liquor section on behalf of Uchumi has seen the retailer lose millions of shillings from the section.

While the project did not take off after the alarm bell was rung, the retailer now has five stores that they cannot stock liquor as a result until the end of the contract. “This Partner was engaged on temporary basis and short term contract of six months. This was not a procurement,” Mr Kipng’etich explained.

“They were accorded shop space to stock liquor at own cost, sell and Uchumi collects sales proceeds. In turn Uchumi received commissions.”

He explained that the engagement was entered into at a time when EABL was not willing to extend any more credit lines to the company.

“It was then that this supplier offered the company an opportunity to stock shelf and earn commission without working capital injection. The contract has since expired.”

But other sources said the supplier’s contract expires at the end of the month and it never stocked the alcohol after queries were raised on the profit margins for Uchumi.

Investigations by Saturday Nation also reveal irregularities like single-sourcing awards of tenders with some of the supplies being made without Local Purchase Orders.

One of the ongoing projects is the renovation of the retailer’s 20 kitchens around Nairobi which, we have learnt, could have been awarded without open tender.