A Tuskys store on Muindi Mbingu Street, Nairobi. FILE PHOTO | NMG The Competition Authority of Kenya (CAK) is investigating the bank accounts of supermarket chain Tuskys after the retailer defaulted on suppliers to the tune of Sh1.2 billion.
Tusker Mattresses Limited has been ordered to furnish the regulator with its monthly bank statements for the past one year for all bank accounts relating to its retail business by Friday this week.
Documents seen by the Business Daily show that this is part of a wide-ranging investigation into one of the country’s largest supermarket operators, which has lost the trust of the regulator.
The CAK started looking into Tuskys operations in April after reports emerged that it was not paying suppliers on time as provided for in their respective contracts.
For weeks now, shoppers have complained of missing essential goods on the retailer’s shelves in a signal that some suppliers are severing ties with the company.
The watchdog on Monday ordered Tuskys to settle the Sh1.29 billion by between July 1 and July 16.
Tuskys’ executives and the retail chain risk a jail term of five years or a fine of up to Sh10 million or both if they fail to settle the debt or furnish CAK with bank statements, audited accounts, list of suppliers and their contracts.
“Any person who fails to comply with the order of the authority commits an offence,” said CAK in a letter to the retailer. “This matter remains under investigations and further orders will be issued as and when merited”.
The retailer on May 15, told the regulator that it owed suppliers a total of Sh884.3 million. It subsequently wrote to CAK on June 12, revising down the outstanding sums without proof of payments and concurrency by suppliers.
However, the regulator, established through independent investigations that the retailer had failed to disclose another Sh400.9 million owed to suppliers.
“With this background and our investigations, the Authority has established that Tusker Mattresses Limited is experiencing incidences of abuse of buyer power in the form of delays in payment of suppliers contrary to sections 24A(1) and 24A(5)(a) of the Act,” CAK wrote in a letter to the retailer seen by the Business Daily.Those sections of the law say a company will be guilty if it delays payment of suppliers without justifiable reason in breach of agreed terms of payment.For such abuse, the culprit faces imprisonment for a term not exceeding five years or to a […]
