The Capital Markets Authority (CMA) has launched an investigation into Kakuzi over allegations of profit shifting abroad and corporate governance issues committed by its majority shareholder Camellia Plc.
The regulator confirmed that an investigation is currently underway but did not provide specifics, implying that the inquiry is focused on corporate governance and transfer pricing.
Kakuzi declined to comment on the matter, stating that they are working directly with the regulator.
Minority shareholders of the company had previously complained about being locked out of the company board, which was controlled by the British company Camellia Plc.
The multinational controls 50.7 percent of Kakuzi through its holdings in Bordure Limited and Lintak Investments.
“We are looking at the company anchor shareholder which has a big say in the company after issues were raised by minority shareholders who feel that over time the big shareholders have been misusing their position,” a senior officer at the CMA who did not wish to be named said.
“They have raised issues where they feel shortchanged and some governance issues with the main shareholder,” the source said.
The market regulator has increased its monitoring of agricultural exchanges for irregular practices that have harmed small shareholders and farmers while benefiting majority owners.
The CMA is also investigating Limuru Tea, which is owned by British multinational Unilever, for undervaluing its 696.8-acre plantation and is suspected of publishing cooking books as the multinational prepares to exit the company.
According to a CMA source, Kakuzi is facing similar challenges due to its majority owners, who have long excluded local shareholders from the company’s board of directors.
In a board shakeup following allegations of human rights violations including rape and violence at the agriculture firm, Kakuzi only appointed its second-largest shareholder, John Kibunga Kimani, as a director.
Dr. Kimani, who was raised as a squatter in Kakuzi’s farms, had previously failed to gain a board seat at the agricultural firm despite owning a 32.2 percent stake in the company worth Sh2.7 billion.
The changes came after law firm Leigh Day announced that it was representing victims in a legal claim against Camellia Plc in the High Court of London in 2020 for alleged human rights violations committed by security guards employed by Kakuzi, its Kenyan subsidiary.
Camellia, which acquired a majority stake in Kakuzi in the 1990s, promised reforms in the aftermath of the allegations, which forced firms like British retailer Tesco to suspend supplies ranging from avocados to macadamia nuts from the Nairobi bourse listed company.
