CMC Holdings Ltd., Kenya’s biggest publicly traded auto dealer, said it may have been overcharged as much as 2 billion shillings ($21 million) over the past five years by a freight-forwarding company run by its former chairman.
Andy Forwarders Services Ltd., the largest supplier of services to CMC, overcharged the company in some instances by as much as 100 times the market rate, CMC said in a statement e- mailed by the Nairobi Stock Exchange today. Peter Muthoka, the chief executive officer of Andy Forwarders, wasn’t immediately available for comment, his personal assistant said when his office in Nairobi was called. He didn’t immediately respond to questions e-mailed by Bloomberg.
“Management is working very hard to get this money back into the company,” CMC Chief Executive Officer Bill Lay told reporters in Nairobi.
CMC in May reported a 9.6 percent decline in first-half revenue to 6.19 billion shillings that reduced net income by 0.7 percent. A month later, the company hired Lay, the former CEO of General Motors East Africa Ltd., to run the company and said it would spend as much as 1 billion shillings on a turnaround strategy.
“Our bottom-line results have been disappointing and unacceptable,” Lay said today.
CMC further plans to cut costs by at least 10 percent in the next financial year that begins on Oct. 1, while growing its market share to 20 percent in the next fiscal year from 13 percent now, he said.
Muthoka was removed as chairman of CMC on Sept. 9, when the company said he would be replaced by Joel Kibe.