Friday, December 1, 2023

How Nakumatt directors ‘stole’ Sh. 1 billion from ailing retailer

Nakumatt directors played a major role in the collapse of the once famous and revered retailer. An audit report for the year ended February 2018 by Parker Randall Eastern Africa shows that Nakumatt top management took more than Sh. 1 billion soft loans directly from the retailer by the time it was placed under administration on January 22, 2018. These loans were all interest free.

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The loans were taken even as Nakumatt stared at debts amounting to around Sh. 20 billion that were owed to suppliers, banks, landlords and employees. A report that was published in the Business Daily on January 2 shows that the amounts owed by insiders had dropped to Sh. 948 million as of February 2018.

“Significant in this net balance is Sh. 948 million due from the directors. These receivables are not supportable based on the available evidence. The amounts due from a director are interest free. They relate to short-term advances through a current account,” the audit report said.

Nakumatt’s founder and former chief executive officer Atul Shah is among those suspected to have taken the loans as he was among the two individuals listed as directors of the company by the report. Mr. Shah is currently facing investigations over the loss of Sh. 18 billion worth of stock. Apparently, he wrote off stock worth Sh. 18 billion in May 2018 before the company collapsed.

The BD report further showed that the loans to the company’s directors were among a series of related party transactions amounting to Sh. 2.8 billion. These loans were declared unlikely to be recovered.

“Others include amounts claimed from subsidiaries in Uganda, Rwanda and Tanzania, which ceased operations. The administrator has written off Sh. 1.5 billion or 53 percent of the receivables, leaving a balance of Sh. 1.3 billion,” the BD report said.

At the same time, BD reports that “banks owed billions of shillings by Nakumatt Supermarket are seeking a private investigator to trace and identify assets linked to the retail chain’s former chief executive, Atul Shah, over loss of cash at the stores. Mr. Shah and his son, Ankoor Shah, are accused of accessing and failing to refund interest-free loans amounting to Sh. 1 billion from the retail chain at a time when the stores were struggling to repay its suppliers, landlords and other creditors.” Nakumatt Latest News. Nakumatt Latest News.

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