The management of Chemelil Sugar Company has been accused of embezzling over Sh200 million loan proceeds and spending on non-authorised vote heads.
A report released by Auditor-General Edward Ouko indicates that the money advanced by the Sugar Directorate was misappropriated and failed to meet the purpose for which the fund was intended.
According to Mr Ouko, Chemelil received Sh248 million from the directorate in the financial year 2015/16 out of a total Sh265 million budgeted for annual maintenance.
“The misuse was not only irregular but also prevented the company from attaining the objective for which the sum was granted,” reads the report.
Even though the company has for several years defaulted on Sh3.4 billion loan owed to the Kenya Sugar Board, no disclosure has been made in the financial statements to explain consequences for the repayment default provided for in the loan covenants.
The management was also accused of engaging in irregular export of sugar between March and May 2008.
Additionally Auditor General said no satisfactory explanation was provided for sale of Sh256m sugar meant for export in the local market.