Jaswant Singh Rai: Rare rough patch for sugar tycoon on the receiving end of President Ruto's tongue lashing
Growing up, Jaswant Singh Rai—the beleaguered tycoon that was reportedly the target of President William Ruto’s tongue-lashing — was the favourite son of Tarlochan Singh Rai.
Tarlochan, the patriarch of the Rai family, cut his teeth in entrepreneurship and the art of deal-making in the Democratic Republic of Congo, formerly Zaire, by buying coffee and tea estates from Belgians who were leaving the central African nation.
All along, Jaswant was always beside his father, learning the ropes in entrepreneurship that would later serve him well as he built his fortune.
As the Rai family’s wealth grew in leaps and bounds, the father placed his son at the heart of his estate. This irked his siblings who accused their father of favouritism. As a result, the Rai family has drifted apart.
In a 1999 lawsuit, Tarlochan’s two other sons, daughter and wife (the mother of the three), reckoned that the patriarch entrusted Jaswant with greater management and decision-making powers in Rai Plywoods (Kenya) Limited, the company that would help the Rai family carve for themselves an enviable commercial fiefdom in the region.
More than 25 years after Jaswant’s tiff with his siblings, accusations of being a beneficiary of favouritism are still dogging the tycoon.
Only this time, it is not the father that is being said to be Jaswant’s benefactor. It is the State.
Jaswant and his cousin Sarbjit last week found themselves on the receiving end of Dr Ruto's tongue-lashing over their legal battles for the control of Mumias Sugar Company, the ailing sugar milling giant.
Read: Police deny holding sugar billionaire Jaswant Singh Rai
"We have told those people (Jaswant and Sarbit) to move out. Mumias belongs to the people and we shall plan for the revival of the sugar mill afresh," said the President during his visit to western Kenya.
"Let them withdraw the court case and move out. I have told them there are only three options left, they either move out, go to jail or embark on the journey to heaven."
In the family feuds, Jaswant seems to have always emerged unscathed. If anything, his interests and influence kept growing.
Through his Rai Group, Jaswant ventured into cement, edible oils and soap, sawmilling, wheat farming, horticulture and real estate.
Now, it looks like the gods are conspiring against a man who, a year ago, looked indestructible.
A week ago, Jaswant was reported to have been abducted by unknown people. He was released two days later. The tycoon is yet to give a public statement on what actually transpired.
Coming fast after Dr Ruto made the incendiary remarks against Jaswant and his brother, the court ordered Jaswant’s West Kenya Sugar to pay Butali Sugar Mills Sh507 million in damages after the former interfered with its operations.
In this case, Butali Sugar’s decision to register a factory close to West Kenya was opposed by Jaswant who said that his firm had made a pact with Sugar Board that there would be no competitor within a 24-kilometre radius of its operations.
The Sugar Board agreed with Jaswant, forcing Butali Sugar to abandon its Sh4 billion investment.
It is a major blow for Jaswant who, following Dr Ruto’s orders, is reported to have withdrawn all the cases he had filed against Mumias’ 20-year lease at the High Court and Court of Appeal.
The cases challenging the lease that had been awarded to Sarbjit’s Sarrai Group had been filed by Jaswant, West Kenya and Vartox Resources Inc.
The man whose rising star is attributed by his siblings to the capture of his father's heart is now being accused of minting billions through State capture. He denies the claims.
His star rose at the fastest rate in the last 10 years, with West Kenya tightening its grip on the sugar market. This even as the fortunes of the once giant miller Mumias Sugar, dwindled.
President Ruto’s team reckons Jaswant, through his West Kenya Sugar, is the embodiment of cartelism in Kenya's sugar industry.
The sugar cartels, the President says, have been paying peanuts to farmers for their cane while selling sugar to consumers at prohibitive prices all while conniving to eliminate competition.
Rai Group—the holding firm for Jaswant’s various businesses—has two milling factories 36 kilometres east and 35 kilometres northwest of Mumias Sugar. This means they are direct competitors of Mumias Sugar.
Court documents, former KCB-appointed receiver-manager Pongangipalli Rao, told the court, show how Mumias Sugar had on several occasions accused West Kenya of illegally buying cane from farmers that Mumias had contracted, a form of malpractice known as cane poaching.
Essentially, with cane poaching, a miller reaps where they did not sow. In this case, West Kenya has been buying sugarcane that Mumias Sugar had invested billions of shillings in by providing farmers with services for land preparation, fertiliser supply, extension services, harvesting and transport.
Mr Rao, therefore, was not amused with West Kenya’s interest in Mumias, terming its bid as a “spoiler bid.”
One individual who had one of his legs into Mumias until the Court terminated the 20-year lease and kicked out Rao as the miller’s administrator, was Sarbjit, Jaswant’s brother.
After years of fighting for the control of the family’s wealth, Sarbjit retreated to Uganda where he set up his own conglomerate under the umbrella of Sarrai Group.
Read: Rai family diversifies into avocado farming
But when the opportunity to lease Mumias Sugar arose, Sarrai Group bid to manage the ailing miller for 20 years.
Rao awarded Sarrai Group the contract of running Mumias as a going concern for the benefits of creditors led by KCB which had seized the miller. The award of the contract triggered a barrage of lawsuits from the discontent bidders, led by West Kenya.
West Kenya, which owns the Kabras Sugar brand, insisted that it was the highest bidder at Sh36 billion compared to Sarrai Group’s bid of under Sh6 billion.
In a real sense, Jaswant’s biggest fear was not just capitulating to a functioning Mumias. Perhaps the worst coup de grace would be one that is delivered by his brother while managing Mumias Sugar. BY BUSINESS DAILY
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