South Nyanza Sugar Company (Sony) has initiated forensic investigations into allegations of fraud by unscrupulous lawyers who are reportedly filing fictitious cases against the miller. This action follows warnings from the Auditor General’s office about the potential risk of the company facing settlements exceeding Sh2 billion if these fraudulent claims succeed.
Auditor General Nancy Gathungu highlighted in her annual report, covering up to June 30, 2023, that the 4,008 historical cases could destabilize the debt-ridden state-owned miller. “The company may be unable to settle the awards, which could lead to the auctioning of its assets,” she warned.
Sony Sugar’s newly appointed CEO, Martine Dima, revealed that more than half of these cases are fabricated. Rogue lawyers allegedly used forged documents to file claims in the names of deceased individuals and unsuspecting farmers. “Our interim report has found that many of these cases have been dismissed, withdrawn, or are based on non-existent claims. Some claimants are even deceased,” said Dima.
Mr. Dima also reported that certain law firms have employed auctioneers who have harassed company staff and seized field vehicles to exert pressure. “Out of six impounded vehicles, three are still detained, and we face high storage fees while trying to revitalize the company,” he added.
Since his appointment as CEO in May, Mr. Dima has spearheaded a dual audit process to verify the legitimacy of these cases, with results expected by the end of August. “We have engaged private forensic investigators and our legal clerks to visit courts in Rongo, Kisii, Migori, and Kisumu to reconcile and confirm the authenticity of these cases,” he noted.
Mr. Dima is hopeful that the audit will reduce the number of cases from the current 3,500 to under 1,000 by eliminating fraudulent suits. These cases primarily involve compensation claims for delayed sugarcane harvests and unpaid deliveries, exposing a complex fraud and embezzlement scheme involving forged documents.
The CEO assured that legitimate claims would be reviewed according to the advocates’ scale of fees to avoid overpayment as the management prepares to implement a comprehensive recovery plan. Recent efforts to address financial issues include the payment of Sh306 million in farmers’ arrears up to June this year, which is expected to restore the company’s reputation and shorten the payment wait time from six months to one month.
To further enhance efficiency and productivity, Mr. Dima announced a two-month factory maintenance plan, scheduled for October and November. “We are procuring parts and preparing for the maintenance after a 20-month hiatus. This will help reduce frequent breakdowns and improve the extraction rate of the sweetener,” he said.