The chief executive and finance director of the publicly traded food manufacturer Kakuzi have been questioned by the Capital Markets Authority (CMA) on claims that Camellia Plc, the company’s principal shareholder, has shifted earnings offshore and created conflicts of interest.
The CMA has gotten in touch with the general manager of finance Benjamin Okiring, financial director Ketan Shah, and CEO Christopher Flowers of Kakuzi recently, according to three persons familiar with the investigation.
In response to claims of a conflict of interest, the CMA said it is looking into the contracts between Kakuzi and its parent firm, Camellia Plc.
The regulator is also investigating the financial effects of transfer pricing, which occurs when businesses make transactions among various divisions of the same organization.
Kakuzi stated that it was speaking with the regulator directly and declined to comment further. Minority shareholders of the business had previously claimed that they couldn’t participate in the board meetings because Camellia Plc, a British corporation, controlled it.
The multinational owns a controlling 50.7 percent ownership in Kakuzi as a result of its holdings in Bordure Limited and Lintak Investments.
“Together with Mr Chris Flowers, the three have been interviewed in the course of the last three weeks,” said a source at the CMA who spoke to local media houses on condition of anonymity. Kakuzi’s principal activities include growing, packing and selling avocados, macadamia nuts, blueberries, tea green leaf and forestry products.
The company also engages in livestock farming and sale of beef. It has a presence in Muranga County in Central Kenya and Nandi County in the Rift Valley.
“Camellia Plc is the ultimate parent of the group. There are other Camellia Plc group companies that are related to Kakuzi Plc through common shareholdings,” says the firm in its 2021 annual report.
“Fellow subsidiaries within the Camellia Plc Group act as brokers and managing agents for certain products and operations of the group.”
The Kakuzi dealings with its fellow subsidiaries was worth Sh369.4 million last year and involved Eastern Produce Kenya Limited, Robertson Bois Dickson Anderson (RBDA) Kenya Branch and Eastern Produce Regional Services Limited.
“The Group transfer pricing policy gives guidance on related party transactions, which are carried out using the arm’s length principle,” Kakuzi says in the annual report.
These transactions will be the focus of the CMA probe. The market regulator has stepped up surveillance of agricultural counters for irregular practices that have hurt small shareholders and farmers while benefiting majority owners.
