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Mumias goes for its former CEO to drive turnaround

Posted in Sugar & Related

KENYA - Mumias Sugar has hired an Australian, Eroll Johnston, as its new chief executive officer to drive turnaround of the company after receiving a Sh1 billion State bailout package.

Mr Johnston’s term begins on August 1, with the tenure of the current CEO Coutts Otolo expiring at the end of this month.

The new CEO is not a stranger to the sugar miller, having worked in the same capacity between 1988 and 2001.

“Mr Johnston has extensive experience in the sugar industry worldwide and he is not new to this factory given the fact that he served here before,” said Mumias chairman Dan Ameyo in a statement.

Mr Ameyo said the miller will be banking on the new CEO’s wealth of experience in the sector to return Mumias to its glory years.

Mr Johnston is credited with establishment of a major cane development programme for both the company’s nuclear plantation and its farmers.

As CEO, he oversaw establishment of strong linkage with farmers, offering them farming implements and other extension services, which increased the production of cane to 230,000 tonnes, which at the time was the highest in the history of any sugar company in the country.

His appointment comes at the time when Mumias is facing a myriad of challenges, key among them the unreliable supply of raw materials due to a cane shortage that is blamed on non-payment of farmers and collapse of extension services.

Cases of corruption among staff also await the new Mumias Sugar boss. The company has recently been at the centre of mega corruption scandals in which it has lost billions of shillings, leaving it with huge losses that continue to threaten its existence.

In the past two years, the miller has descended deeper into losses, mostly blamed on mismanagement and theft by past executives.

Financial consultancy KPMG’s forensic audit of the miller revealed massive misuse of funds, pilferage and tender manipulation that cost it Sh1.1 billion in illegal sugar imports.

The miller also suspended four top managers in April from its marketing department for diverting ethanol meant for export into the local market, causing tax revenue losses worth millions of shillings.

Those suspended to pave way for investigations into the scandal included its commercial director, local sales manager, production manager and national sales manager.

As part of the turnaround plan, the firm recently hired eight new managers to replace those who had been fired over the corruption allegations.

Mr Ameyo said that payment of farmers will start on Friday after the verification of their claims with the miller.

While issuing the Sh1 billion bailout cheque last month, President Uhuru Kenyatta urged the management to prioritise payment of farmers’ dues. The firm owes growers Sh600 million.

The bailout cash was part of the company’s rescue plan that the government, as an anchor shareholder with a 20 per cent stake, promised to give the miller to facilitate its revival.

July 9, 2015; http://www.businessdailyafrica.com/Corporate-News/Mumias-goes-for-its-former-CEO-to-drive-turnaround/-/539550/2781830/-/10wlsv1/-/index.html