Cost of Corruption, American Company Dumps Kenya for Uganda after Sh5Billion Loss in Fraud

As corruption scandals continue to cloud institutions in Kenya and killing mega investments, the latest company to bow out of Kenyan market is Americas, One Alliance. The U.S based tobacco firm One Alliance has called off its contract with Kenyan farmers.

Following forensic auditing that was carried out by a third party audit company hired by the American firm. One Alliance says they spent Sh.180Million to investigate the fraud in their Kenyan subsidiary which revealed up to Sh.5Billion was lost in an insider fraud scam.

The company had contracted 1,000 farmers in Migori which are the region’s biggest tobacco producer to supply it with the raw product for making cigarettes. One alliance has since cancelled their contract with Kenyan farmers and now engaging Uganda for the raw material.

Migori farmers had been contracted to supply the American company with tobacco to its processing plant in Thika. “improper accounting occurred at our Kenyan entity resulting in approximately $50.8 million of discrepancies, mainly in inventory and accounts receivable that stretches back to at least 2008,” read part of the company’s statement.

Tobacco Farmer in Migori

Insider dealings as that of the One Alliance has seen many big companies in Kenya call off their contracts if not collapsing. Uchumi Supermarket is on the verge of closing their shops. Imperial, Dubai and Chase Bank were both put on receivership following dirty inner frauds.
Another South African Company, Haco Tiger under the chair of the industrialist Chris Kirubi after forensic auditing was found to be another case of insider deals.

Directors accused of manipulating their data including profits. Investor confidence is key in any venture, and the corruption state in Kenya continue to swallow many and a discouragement to many investments.

The cancellation by One Alliance now leaves British American Tobacco an upper hand as the region’s biggest buyer of Tobacco.

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