The High Court Commercial Division on Tuesday granted an injunction to Audit Consult and Audit Consult Advisory Services freezing bank accounts of Salima Sugar Company Limited held at all the country’s eight banks.
The order of injunction follows the alleged failure by Salima Sugar to pay Audit Consult about K542 million for conducting a forensic audit at the firm.
High Court Commercial Division Judge Ken Manda issued the injunction after considering the application and the sworn statement of Audit Consult Engagement Partner Ranwell Mbene.
“The defendant by its officers or agents or anyone acting on their behalf be and is hereby restrained from removing, or in any way disposing of, dealing with, or diminishing the funds standing or coming to the defendant’s credit with any or all of the above parties cited to the extent of K623,300,000,” the injunction reads.
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According to Mbene’s sworn statement, in early 2023, Salima Sugar published Terms of Reference (TORs) for Conducting a Financial Forensic Audit of Salima Sugar Company Limited
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The assignment was to be carried out in four weeks from the date of effectiveness of the contract.
Mbene said Audit Consult submitted a proposal and emerged successful.
On March 16, 2023 Salima Sugar invited Audit Consult for price negotiations which was followed by a series of negotiations which later culminated in a final proposal of K197,171,520 of which Audit Consult would deduct K72,171,520 which would be their contribution to public accountability.
Mbene argued that the two parties agreed that additional fees would be chargeable if there was an increase in the scope of assignment.
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They further agreed that legal fees ultimately payable would be K125 million for the four weeks’ period.
According to Mbene, Audit Consult commenced work and produced an Inception Report dated May 12, 2023 which was presented to all the shareholders.
He says it was noted that at least 13 more critical areas that needed to be covered in order to effectively execute the scope of work were not included in the scope of work explicitly set out in the TORs yet shareholders wanted the areas reviewed.
Audit Consult was told to do a more detailed report and the audit firm advised that the additional work would attract additional fee to be agreed by parties.
According to Mbene, eventually, a draft report was developed and presented to the shareholders’ meeting on October 18, 2023 at Greenbelt Authority Main Conference Room.
One of the items on the agenda was the audit fees. Audit Consult proposed the sum of K642 million as additional fees and K39.921 million as additional reimbursables.
Audit Consult offered a reduction of K100 million which Salima Sugar accepted.
He said the shareholders resolved that the Chairman of the Board of Salima Sugar would sign a resolution on the additional audit fees and additional.
“The Chairman refused, neglected or otherwise failed to sign the resolution. His reasons are not known or justified,” Mbene said.
He added that on October 24, Audit Consult issued an invoice for the additional fees of K542 million and that to date Salima Sugar has not paid the additional fees despite numerous reminders.
We had not managed to get a comment from the company by press time.
