Kenya Insights

Tag: Rai family

  • Sugar Millers With Questionable Traits Should Be Axed

    Sugar Millers With Questionable Traits Should Be Axed

    Most of the sugar millers have failed to put in place cane development programmes in collaboration with contracted cane farmers in the designated areas as clearly stipulated by law

    Majority of sugarcane milling companies in western Kenya should have their operational licenses revoked by the government for completely failing to adhere to the requirements demanded of them when they were issued.  

    Most of the sugar millers have failed to put in place cane development programmes in collaboration with contracted cane farmers in the designated areas as clearly stipulated by law, a requirement when they made the applications.

    It is also indeed a statutory requirement that millers must prove to the Agriculture, Fisheries and Food Authority (AFFA) and particularly the regulatory authority , Sugar Directorate that they are actualizing this requirement on the ground for them to retain the milling licenses.  On the contrary what is currently happening on the ground is the fact that sugar development programmes across the counties in western Kenya have been abandoned by millers – thus leaving vulnerable cane farmers at the mercy of predatory and scavenging operatives in the name of brokers.

    The worst aspect of the whole imbroglio is that most of farmers cannot afford on their individual self the costs of executing the sugarcane development programmes, most operate on small farms. Land preparation, seed planting, and crop husbandry to maturity, harvesting and transportation to the factories is an expensive afire.

    The legal requirement is that millers must invest in sugarcane development programmes in collaboration with farmers after which they recoup their investment costs from farmers’ earnings after delivery of mature crop for processing. These costs include land preparation, seed, farm inputs like fertilizers, harvesting and transport costs among others.

    Millers most often deduct their dues soon after the crop is delivered at the factory for the first, second and third harvests and in many cases leave many farmers with nothing in what is popularly known on the ground as DRs.

    In essence this means that cane farmers are the ones who end up financing the entire development programme with loans from the millers.

    At the moment it is clear that millers like West Kenya in Kakamega County with subsidiaries like Olepito Sugar in Busia County, and Sukari Millers in Migori are leading the pack of millers without any sugar development programmes to their credit. The question is where are they getting the cane from to keep afloat and claim that they are the leading producers in the country?  What is their role in the nearly ten years old sugarcane poaching crisis in the country and what has AFFA done to keep it in line?

    West Kenya Sugar Company chairman Jaswant S. Rai (right) and managing director Tejveer Rai (left) during a parliamentary joint committee hearing.

    The Rai family owner milling firm has been in the receiving end over links to contraband sugar smuggling.

    In 2018, West Kenya Sugar Company and Eastleigh-based Diamond Wholesalers traded blame over the origin of 1,200 tonnes of contraband sugar seized at the latter’s warehouse.

    While appearing before a joint committee of Parliament, West Kenya termed the Kabras branded sugar as “fake,” but Diamond Wholesalers claimed it bought the impounded sweetener from West Kenya.

    Kabras brand is produced by West Kenya. Diamond Wholesalers have previously been linked to sugar smuggling in Mumias factory collapse in cohorts with Evans Kidero. West Kenya, which produces the popular Kabras Premium White Sugar and Kabras Brown Sugar, is among company’s whose brands have been linked to the illicit sugar which is said to have found its way to the shelves. Like in Mumias, West Kenya has been accused of smuggling sugar and repackaging to Kabras brand.

    The other millers who are flouting the sugarcane development programmes whose licenses must be put on the chop include Butali in Kakamega county, Nzoia in Bungoma, Chemilil and Muhoroni in Kisumu, Sony in Migori and Mumias Sugar, who should be forgiven at the moment as they put their house in order, it was the best miller in organizing, maintaining and executing these programmes before its collapse.

    The biggest irony is the fact that another milling company which was diligent in executing these programmes in collaboration with its contracted sugarcane farmers is Soin in Trans-Mara County whose operations have since collapsed leaving farmers stranded with huge quantities of the raw material on their farms.

    This messy state of affairs has since seen many of these millers smuggling the raw material cheaply from Uganda and even Tanzania to keep factories stay afloat. They have also turned to predatory brokers who buy the raw material at throw away prices from desperate cane farmers in the country for as little as Ksh.. 1, 500 to 2500 a ton to sell it to the millers at Ksh. 3, 500 instead of the official Kshs. 3, 840 for the same. The farmers are being grossly exploited and many of them may abandon cane farming altogether as it happened to cotton farming in the late 1970s to early 1980s.

    Production of sugar in Kenya is currently dominated by privately owned sugar millers led by West Kenya Sugar Company which has a 30.1 percent share of the market.

    It is followed by Sukari factory at 21.4%, Butali Sugar mills at 17.7%, Transmara sugar at 5.2%, Nzoia sugar at 5%, south Nyanza Sugar at 4.4%, Muhoroni Sugar at 3.7%, Mumias Sugar at 1.9% and Chemelil Sugar at 1.1%.

    In 2015, Mumias sugar was the market leader in terms of sugar production. However, private sugar millers have continued to take the lead with former market leaders and state-owned millers performing dismally.

  • State Captured, Dissecting The Rai Family

    State Captured, Dissecting The Rai Family

    In January 2017, a lavish wedding between Gavneet Chatthe and Rajbir Rai was celebrated at the Sarova Mara Game Camp within Maasai Mara.

    Several prominent businessmen and politicians attended the lavish invite-only ceremony, among them Deputy President William Ruto.

    Clearly, the Rai Family enjoys a cordial relationship with the DP. He, however, is neither the first nor the only one. The family has enjoyed close association with the Daniel Moi, Mwai Kibaki and Uhuru Kenyatta governments for over four decades, and has reaped handsomely from the resultant political patronage.

    The Family – made up of patriarch Tarlochan Sigh Rai (deceased), his wife Sarjit Kaur, and sons Jaswant Rai, Jasbir Rai, Iqbal Rai and Daljit Kaur Hans – came into prominence when Tarlochan bought off large tea and coffee estates from Belgians fleeing then Belgian Congo – now Democratic Republic of Congo – in the 1960s.

    He built a fortune and entered Kenya by partnering with a fellow Asian to produce chests for their coffee and tea in Eldoret in the 1970s.

    To say the family has greatly benefitted from political patronage in the sugar, wood, cooking oil and soap manufacturing businesses is understatement; it owns and dominates these sectors.

    The Rai family has cultivated an appetite for affiliation to prominent politicians for since 1993 when Raiply partnered with Nicholas Biwott and former President Moi after the brutal murder of its previous partner Shabir and his wife in Eldoret.

    The biggest manifestation of the industrialist family’s reach in the Jubilee government came with the acquisition of Kenya’s only paper mill, Pan Paper Mills in Webuye, at the chickenfeed price of 900 million shillings

    Following this partnership, Rai, who came to Kenya in 1971 from Uganda after the expulsion of Asians from the country by the then President Idi Amin, began enjoying concessions in the excision of Mt Elgon Forest, where they cultivate hard wood trees for the Eldoret-based wood processing industry.

    So beneficial was the partnership with Moi and Biwott that Rai’s family business quickly expanded from timber to sugar as they continued to enjoy political benefaction, courtesy of the elder Rai’s collusions.

    Through their companies – Rai Investments Limited, Rai Plywoods (Kenya) Limited, Rai Products Limited, Rai Holdings Limited, Tulip Properties Limited, Rai Expo Park Limited, Tarlochan Singh Rai Limited, Kabarak Limited, PBM Nominees Limited and Sarjit Singh & Ram Singh Limited – the family has continued to enjoy privileged business opportunities.

    Rai Products Limited’s original shareholders were Rai Investments Limited, Tarlochan Singh Rai, Jaswant Rai and former Laikipa Senator and powerful minister G.G. Kariuki.

    Kabarak Limited, for instance, is associated with Moi owns 1.4 per cent of Raiply, and has continued to get licences to log indigenous hardwood, according to a report recently released by the Jubilee government-appointed task force of forest destruction.   

    It is during the partnership with Biwott and Moi that Raiply earned the license to log protected public forests, which it did with wanton promiscuity.

    The family then wooed the Kenyatta family when Jaswant allegedly secretly siphoned family business funds sometime in the 1990s and invested in two Kenyatta family businesses – Commercial Bank of Africa and Timsales, which was a competitor to RaiPly.

    But the biggest manifestation of the industrialist family’s reach in the Jubilee government came with the acquisition of Kenya’s only paper mill, Pan Paper Mills, Webuye, at the chickenfeed price of 900 million shillings. The last audit value of the Mills, done in 2016, was Sh19 billion.

    The receiver managers in charge during the second bail out of the mill – which was a joint venture between the government and an Indian investor – confessed that the presence of powerful manipulation led to the cheap sale of the mill’s assets to the Rais; Sh900 million is less than what was injected in at the last bailout.

    Rai group of company directors when purchased the Webuye paper mills.

    Testy family relationship

    The purchase gave the Rai family and their backers a whooping Sh18 billion payday in assets for a Sh900 million investment. Given its history, it’s all in a day’s work.

    Two of the Rai brothers, Sarbjit and Jasbir, following family disputes, have since established Nile Plywoods (Uganda) Limited and Poly pack Limited in Uganda, where they equally enjoy more than cordial ties with President Museveni. The two also have a 25 per cent shareholding in Lukenya Flowers Limited.

    The family also has substantial investment in India that at one time led to protests by family members against Tarlochan over the millions of shillings invested in the Asian country.

    Jasbir once accused Jaswant of diverting Sh100 million from the family’s Standard Chartered Bank account, Eldoret Branch, to Kenya Commercial Finance Company in Nairobi without the involving the rest of the family consent.

    The matter was reported to police by Tarlochan and Jasbir was later paid Sh46 million before he and Sarbjit moved to Uganda, where they then established PolyPack Limited with a Ksh350 million capital investment equally owned by Jasbir and Sarbjit, and Nile Plywoods (U) Limited with US$ 2.5 million, with a joint 45 per cent shareholding.

    Sarbjit would later buy out Karim Hirji’s 51 per cent shareholding after obtaining Ksh180 million from his father.

    When the crackdown on sugar smuggling barons began in the country, it was Leader of Majority in the National Assembly Aden Duale, in a statement to parliament, who linked the Rai family to the importation of 187 million kilogrammes of sugar during the duty free period allowed by the government, but which had been contaminated by copper and mercury due to poor handling.

    Tellingly, it is former Kakamega senator Bonny Khalwale who came to the defence of the Rais – with the weedy assertion that some barons wanted to close down West Kenya Sugar factory.

    The family’s appearance before a parliamentary committee for ‘grilling over the saga turned out to be a tragic farce where committee members displayed rare carnal excitement at being close to such a immersing figure as Jaswant. It evoked thoughts of “birds of a feather”.

    Reportedly, an MP from Western Kenya had come in with fat wads of cash on behalf of the Family, which he had distributed amongst the committee members prior to the meeting.

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