The Hidden Hand: Vertox Resources and Swiss Owner Kristian Khachatourian Deepen Mumias Sugar’s Crisis

The revival of Mumias Sugar Company, once Kenya’s largest sugar producer, has been marred by a web of legal battles, corporate intrigue, and allegations of opaque transactions.

At the center of this complexity is Vertox Resources Ltd, a British Virgin Islands-registered entity owned by Swiss national Kristian Khachatourian. Vertox’s involvement in the ownership and control of Mumias’ ethanol distillery and co-generation power plants has added a layer of international opacity to an already contentious situation.

Background: Mumias Sugar’s Downfall and Revival Efforts

Mumias Sugar Company, once a cornerstone of Kenya’s sugar industry, fell into financial distress due to mismanagement, corruption, and competition from cheap sugar imports. In 2019, the company was placed under receivership by Kenya Commercial Bank (KCB), its largest creditor. KCB appointed Pongangipalli Rao as the receiver-manager, who subsequently leased Mumias’ operations to Sarrai Group, an Ugandan-based company owned by the Rai family, specifically Sarbit Rai.

However, the revival efforts have been plagued by infighting between two billionaire brothers, Jaswant Rai of West Kenya Sugar and Sarbit Rai of Group. The latest flashpoint is the ownership and control of two critical assets within Mumias’ premises: the **ethanol distillery plant** and the co-generation power plant.

Vertox Resources’ Entry into the Mumias Saga

Vertox Resources Ltd, owned by Kristian Khachatourian, emerged as a key player in the Mumias saga through a series of transactions involving Mumias’ secured creditors. Mumias had three major secured creditors:
1. KCB: Held securities over the entire factory and land.
2. Ecobank: Held a fixed charge on the ethanol distillery plant.
3. Proparco (a French development finance institution): Held a fixed charge on the co-generation power plant.

In May 2021, KCB attempted to consolidate its control over Mumias by offering to buy the loans held by Ecobank and Proparco at a discounted rate. Both creditors refused. Shortly after, Victoria Commercial Bank purchased the loans from Ecobank and Proparco. In a surprising move, Victoria Commercial Bank then flipped these loans to Vertox Resources Ltd , a company registered in the British Virgin Islands.

The Role of Kristian Khachatourian and Vertox Resources

Kristian Khachatourian, a Swiss national whose name appears in the Panama Papers, is the ultimate beneficial owner of Vertox Resources. The Panama Papers leak revealed how offshore entities are often used to conceal ownership and facilitate complex financial transactions. In this case, Vertox’s acquisition of the loans gave it legal rights over the ethanol and co-generation plants, effectively making it a key stakeholder in Mumias’ revival.

Mention of Kristian in the Panama Papers.

Vertox’s first action after acquiring these rights was to appoint its own receiver for the two plants, setting the stage for a legal showdown with KCB and Sarrai Group. Vertox filed court proceedings seeking to wind up Mumias Sugar entirely and even demanded that the CEO of KCB appear in person to give evidence. These actions have further complicated the already fraught relationship between the various parties involved in Mumias’ revival.

The Battle for Control: West Kenya vs. Sarrai Group

The involvement of Vertox Resources has intensified the rivalry between Jaswant Rai’s West Kenya Sugar and Sarbit Rai’s Sarrai Group. West Kenya Sugar has recently claimed legal rights over the ethanol and co-generation plants, despite Vertox being the entity that acquired the loans from Ecobank and Proparco. This has led to protests by local leaders and farmers, who stormed the Mumias factory to oppose West Kenya’s takeover of the plants.

Dr. Bonny Khalwale, a prominent Kenyan senator, has publicly criticized the situation, alleging that KCB imposed an embargo on the operations of the two plants. However, KCB has no legal rights over these assets, as they were transferred to Vertox Resources. This misdirection highlights the confusion and lack of transparency surrounding the ownership and control of Mumias’ critical assets.

The Broader Implications

The involvement of Vertox Resources and its Swiss owner, Kristian Khachatourian, raises several red flags:
1. Opacity in Ownership: The use of offshore entities like Vertox Resources obscures the true beneficiaries of these transactions, making it difficult to hold anyone accountable.
2. Legal Battles: The ongoing court cases between Vertox, KCB, Sarrai Group, and West Kenya Sugar are delaying the revival of Mumias Sugar, to the detriment of farmers and the local economy.
3. Impact on Farmers: The confusion over ownership and control has led to halted operations, delayed payments, and protests, further destabilizing the sugar industry in western Kenya.

The entry of Vertox Resources into the Mumias Sugar saga has added a layer of international complexity to an already contentious situation. The opaque nature of the transactions involving Vertox and its Swiss owner, Kristian Khachatourian, underscores the need for greater transparency in corporate dealings, especially when they involve critical national assets like Mumias Sugar. As the legal battles continue, the future of Mumias Sugar—and the thousands of farmers who depend on it—remains uncertain.

There’s an urgent need for Kenyan authorities to scrutinize the role of offshore entities in the country’s key industries and ensure that the revival of Mumias Sugar benefits the people of Kenya, not just a select few with hidden agendas.