Karuturi workers accuse CFC Stanbic Bank for the malpractice

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Kenyan WallStreet | 6 June 2018

Karuturi workers accuse CFC Stanbic Bank for the malpractice

by Kenyan WallStreet

Over 2000 workers of the Naivasha based flower farm, Karuturi Limited have today written to the National Treasury, Ethics and Anti-corruption Commission, KRA and the Central Bank requesting the institutions to exercise their powers and apprehend CFC Stanbic Bank for the malpractice they claim the bank has committed together with its receiver managers.

The employees who accuse CFC Stanbic for demanding more money than it lend to Karuturi owners say the South African based lender is responsible for the poverty that struck their families since Karuturi was placed under receivership, 3 years ago.

“We bring this matter to your attention due to a very peculiar sequence of events, leading to a very cruel outcome for us and our dependents, presented below:  In 2012, CFC Stanbic Bank offered Karuturi Limited a loan of USD 6,590,000. After disbursing USD 4.04 million, CFC stopped the loan disbursal. When asked why by Karuturi, they gave no response. Due to this sudden stop in cash flow, the next installment payment was late,” read a statement presented to the Permanent Secretary at the National Treasury and copied to Central Bank Governor, Mr. Patrick Njoroge.

The statement goes on to say, “CFC took this as a cue to recall the loan and put the farm under Receivership. Karuturi then paid CFC 10% of the total loan amount (400,000 USD) as gesture of goodwill that they will repay the loan and to regain control of the farm, but to no avail. CFC took over Karuturi Limited’s assets.”

The employees also claims that Receiver managers appointed by CFC Stanbic Bank showed a loss, and borrowed from CFC Stanbic Bank to finance their loss making operations. “This continued for the duration of the Receivership of 23 months. In the meantime, the farm’s assets were deteriorated, production numbers were reported as lower than ever and the sales reported plummeted as well,” reads the statement.

CFC Bank is also blamed for continuing to lend to its Receivers money through an overdraft facility. “This led to the CFC appointed Receivers loosing over USD 16 million of the banks money: all in the pursuit to recover a USD 4 million loan for the bank.”

The employees also claim that the Receivers didn’t pay their wages on time and now have been left jobless with no compensation.

“We request the Central Bank of Kenya to look into the operations of CFC Stanbic bank to enquire who approved this misadventure on their part, spending USD 16 million to recover a loan of USD 4 million. Please help us with your expertise in the manner. We don’t want to stand ignored in the fight of CFC Stanbic Bank versus Karuturi Limited,” reads the employees’ plea to CBK governor.

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The Star | 8 June 2018

Former Karuturi workers petition Treasury to probe bank over dues


By MERCY GAKII @gakiiz

Former employees of flower firm Karuturi Ltd have appealed to the government to facilitate their benefits after the company was put under receivership.

The 2,500 workers who were rendered jobless in 2014 want Treasury, Central Bank of Kenya, Kenya Revenue Authority and the Ethics and Anti-Corruption Commission to probe Stanbic Bank.

They accused the bank of advancing loans to the firm’s receiver managers even when it had become clear they would not repay.

The actions of the bank, they said, contributed to Karuturi’s collapse. They are now unable to get their benefits. “We bring this matter to your attention because the actions of the bank led to a cruel outcome for workers,” reads the petition signed by Ferdinand Juma.

Juma is the Kenya Plantations and Agriculture Workers Union (KPAWU) chairman for Naivasha.

The letter was copied to Naivasha MP Jane Kihara.

The workers want compensation and benefits for employees who worked for more than 10 years.

Karuturi Limited executive director Yeshoda Karuturi has supported the workers’ petition.

“To be denied benefits after working for over 20 years is an act of treachery by the receiver managers and the bank. It was impossible to incur a loss of Sh1.6 billion and only recover Sh400 million. It is a complete mockery of the prevailing laws,” Karutusi told the Star on the phone yesterday.

Stanbic Bank acknowledged it was aware of the matter but declined to comment.

“We are regulated by the Central Bank of Kenya and we adhere to the provisions of the Banking Act at all times. We understand the sentiments around the issue but won’t comment because the matter is in court,” the bank’s senior communications manager Willis Angira said.

Karuturi Ltd, one of the world’s top growers of roses with exports of more than one million stems annually, was put under receivership in 2014 after failing to service a Sh383 million loan borrowed from Stanbic Bank.

In March, the High Court allowed the bank to auction the assets of Karuturi Ltd if the owners failed to clear Sh1.8 billion debts owed to the lender in three months.

Justice Francis Tuiyott said a three-year-old court order restraining the bank from auctioning the properties of the flower farm was to stand vacated after the lapse of 90 days.

The judge observed that the owners, Surya Holdings Limited and RHEA Holdings Limited, admitted the pre-receivership debt and the post-receiver debt had been assessed by and audit firm selected by the owners themselves.

The workers said they have suffered since 2014 when the receivership pushed them out of work.

“Long serving workers need their terminal benefits. It is long overdue,” Juma said.
Original source: Kenyan WallSt
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