Court petitioned over Kinyara Sugar public share listing

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A private citizen has petitioned the court, seeking to have Kinyara Sugar Limited listed on the stock exchange for the public to buy shares.

In a suit filed on May 23, 2024, Muzamil Bikanga argues that President Yoweri Museveni directed that the company be listed for Ugandans to buy shares but the ‘mafia’ sold the public shares without advertising them to the public.

Kinyara Sugar Limited (formerly Kinyara Sugar Works Limited) was sued alongside Vectrum Uganda Limited (formerly Vectrum Overseas Holdings Limited), Rai Holdings Limited and the Attorney General.

Court documents indicate that Kinyara Sugar used to be owned by the Government before it became a private limited liability company incorporated in Uganda, which operates sugar plantations and a sugar production factory headquarters in Masindi district.

Bikanga contends that Rai Holdings bought 51% of the shares in Kinyara Sugar Limited in 2006 and that it facilitated the illegal and fraudulent transfers of the public shares to another private company.

He, therefore, seeks to recover the 19% shares allotted to the general public by the Ugandan government but fraudulently and corruptly stolen by the defendants.

Prayers

He wants the court to declare that the general public (people of Uganda) are entitled to buying 7,654,226 shares which translates to 19% shares at the initial public offering in Kinyara company pursuant to the 2006 sale agreement between Uganda and Rai Holdings.

Bikanga also seeks a declaration that the sale of public (government) shares in Kinyara company without a public call or general advert or any notice in the gazette is illegal, null and void.

He further seeks a declaration that the defendants conspired to defraud the general public (Ugandans) when they sold and transferred their shares to Vectrum in total disregard of the public interests.

Bikanga seeks a court order for Kinyara Sugar and the Attorney General to render a true account for the proceeds of the illegal and fraudulent sale of the disputed public shares to Vectrum.

Background

Court documents indicate that Kinyara company, which previously traded under the name National Sugar Works (Kinyara) Limited and Kinyara Sugar Works Limited, was a state enterprise wholly owned by the Government from the 1960s.

However, around the 1970s and 1980s, the company was destroyed by economic distress. In the 1990s the government revived the Kinyara company by investing taxpayers' money in it.

The Government hired Booker Tate Limited, a United Kingdom-based management consulting company to manage the factory on its behalf and it became profitable.

The documents further show that around 2000 the government adopted the structural adjustment programme and privatisation was one of the plans introduced by the Government.

Subsequently, the Government passed a cabinet resolution to privatise the company and the same was communicated on how the company shares shall be dealt with the allotment of shares was done by the government to different entities such as the Bunyoro Kingdom, out growers and workers of the Rai Holdings and the general public.

In 2006, Rai Holdings purchased 51% shares in Kinyara Sugar Limited after emerging as a successful bidder. The Government also ceased being the owner of the remaining 49% of shares but held it in trust of the owners who were determined by Cabinet before the sale.

Museveni’s letter

Following the sale of shares, President Yoweri Museveni in a letter written in 2008 was surprised that the privatisation unit did not implement a cabinet decision to transfer the shares to other entities in particular Bunyoro Kingdom.

In 2010, Museveni wrote another letter to the finance ministry informing of the government’s decision and how Kinyara was privatised and directed to issue share certificates to Bunyoro Kingdom per the terms of the sale agreement of 2006 between the Government and Rai Holdings.

In 2011, the finance ministry wrote a letter to His Royal Highness the Omukama of Bunyoro informing him of the cabinet decision awarding Bunyoro Kingdom 10% shares.

Fraud

The applicant contends that after the pact, the Attorney General secretly went ahead to enter into another ‘fake agreement’ with Vectrum, knowing that the Government ceased to own the said shares after signing the 2006 agreement with Rai Holdings.

Bikanga contends that under unclear and illegal circumstances another 39% of shares of other entities were fraudulently transferred to Vectrum, which includes 19% of public shares.