Karuturi owners want receiver jailed for failure to give financial records

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Workers at Karuturi flower firm, which is under receivership. (Photo: Business Daily)
Business Daily | 8 September 2015

Karuturi owners want receiver jailed for failure to give financial records (Kenya)

Troubled plantations company Karuturi Limited’s owners have asked the High Court to jail the flower firm’s receiver managers for denying them access to its financial records in disregard of a court order issued in July.

The Naivasha-based firm’s managing director Sai Karuturi says efforts to have receiver managers Kieran Day and Ian Small furnish them with Karuturi’s financial records as ordered by Justice Francis Gikonyo in July have failed. The company intends to use the financial records in an intended sale of shares of the company.

Justice Gikonyo ordered CfC Stanbic to allow Karuturi’s owners access to the enterprise’s premises and financial records for them to seek investors willing to take over the Kenyan lender’s debt.

CfC placed Karuturi under receivership in February last year for defaulting on a $4 million (Sh400 million) loan.

The bank’s takeover of Karuturi’s operations sparked a vicious court battle that has seen its owners accuse the lender’s receiver managers of mismanagement. The flower firm’s debt to CfC has since the takeover increased to $6.3 million (Sh630 million).

“On gaining entry to the premises on August 31, we were met by one Peninah Murungi and a John Petterson. They further advised that they have no instructions to provide any information, records, facilitation or assistance of any sort to the directors and any of their agents,” says Mr Karuturi.

But Ms Murungi, a human resource manager for the receivers, says she and Mr Peterson were in the process of providing the financial records when Mr Karuturi disrupted the site visit.

She claims Mr Karuturi threatened to break the doors of the receivers’ offices and seize the documents himself. Ms Murungi further alleges that the MD made unreasonable requests such as demanding accommodation for him and his associates on the premises.

“The actions of Mr Karuturi agitated the company’s employees and made it very difficult to proceed with the audit. The information requested was very bulky and it would take a long period of time to source it. At this point, the plaintiffs (Karuturi’s owners) left for the day,” she says in her response.

She adds that Mr Karuturi had attempted to use the police to break into the receivers’ offices to obtain the financial records. Mr Karuturi has also faulted the receivers for allegedly denying the owners’ appointed auditors—PKF Consultants-access to the premises on September 1.

He says the assessors requested certain information from a Patrick Maina who is a senior manager with the receivers, but was met with unreasonable conditions.

Mr Maina however says the auditors showed up in the presence of one of his former colleagues who had been dismissed, and that they opted to leave when she was not granted access to the premises.

Karuturi’s owners say the receivers are mismanaging the firm so as to make it insolvent. They add that their lack of access to its financial records have made it impossible to find another lender willing to take over CfC’s debts despite several offers being made.

The case will be mentioned before Justice Fred Ochieng on September 22.
Original source: Business Daily
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