In On December 13, 2001, the Industrial and Commercial Development Corporation (ICDC) made a bold step in seconding Christopher John Kirubi to the Uchumi Supermarkets Ltd Board of Directors.
Mr Kirubi was coming in to fill the big shoes of successful decision makers like Suresh Shah, who had found himself at Uchumi in similar fashion.
Mr Shah was a revival expert and was tapped from the ICDC in 1980 after an attempt to have Italian firm Standa SPA run Uchumi resulted in massive losses over four years.
Employees turned into thieves and robbed the retailer blind. Mr Shah had turned Uchumi into a retail industry juggernaut.
By the time Mr Kirubi joined Uchumi in 2001, the retailer was doing more than Sh1 billion in turnover, raking in well over Sh150 million each year in profit, and had cash reserves of a similar amount.
Mr Kirubi was appointed board chairman at Uchumi at a time he and the ICDC were significant shareholders, owing to the government’s divestment from the supermarket chain.
The hubris that came with nearly guaranteed profits, huge cash reserves and prime assets led Mr Kirubi into pushing for an expansion drive that sparked off Uchumi’s first collapse and a long receivership spell.
At first, Mr Kirubi’s policies worked, as the retailer’s turnover rose by more than Sh100 million to Sh1.3 billion in his first year as board chairman.
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But the expansion drive that would last another two years came with extra operation costs, and auditors would later reveal that some branches were opened without proper feasibility studies or business plans.Some of the stores opened turned out to be poor investments as there were no customers to buy the thousands of goods displayed on the shelves.Company records were so poorly kept that auditors were unable to unravel who was stealing from Uchumi or how they were doing it.Some of the goods being stocked did not make sense, like greeting and success cards worth more than Sh70 million that no customer wanted to buy.In 2004, the retailer’s board of directors, led by Mr Kirubi, opted to sell one of Uchumi’s most valuable assets at one third of its value, and to a firm that has attracted controversy over the years.On June 11, 2004 the Uchumi board resolved to sell a building in Nairobi’s city centre that housed the retailer’s Aga […]
