Uchumi Supermarkets Ltd., Kenya’s only publicly traded retailer, fired two top executives amid a forensic audit and announced plans to hire a management consultancy to review its business strategy. The stock slumped.
Chief Executive Officer Jonathan Ciano and Chief Financial Officer Chadwick Okumu were relieved of their duties, while Human Resources Manager Michael Kibe was suspended, Chairwoman Khadija Mire told reporters Monday in the capital, Nairobi. General Manager for Operations Owino Ayodo has been appointed as acting CEO and recruitment of a full-time replacement will begin immediately, she said.
Ciano and Okumu were fired for “gross misconduct and gross negligence” after suppliers stopped delivering goods to the retail chain’s stores because they are owed more than 1 billion shillings ($10.3 million), Mire said. Ciano said the allegations are “not true,” while Okumu also denied them.
Uchumi went into receivership in June 2006 with debts of 2.2 billion shillings, of which 957 million shillings was owed to Kenya Commercial Bank Ltd. and PTA Bank. Ciano was then named specialized receiver manager. The receivership ended on March 4, 2010, after most of the company’s debts were cleared and others converted into shares. The company resumed trading on the Nairobi Securities Exchange on May 31, 2011.
“We and the board agreed that we terminate the relationship,” Ciano said by phone Monday. “When you realize that you are not getting the support you need and you want to save the brand, that is what happens.”
Asked about the allegations of misconduct, Okumu said by phone: “No, no. Having been there for eight years, we were definitely working, and very hard.”
Shares in the retail chain slumped as much as 9.6 percent, the largest one-day loss in more than three years. The stock traded down 9.1 percent by the 3 p.m. close in Nairobi, increasing its loss since re-listing to 23 percent.