Isaac Esipisu
31 December 2003
Nairobi — Parmalat - the Italian food giant at the centre of massive financial fraud that has stunned the corporate world - sought strategic partnership with Kenya Cooperative Creameries three years ago.
KCC, then in dire need of financial resuscitation after sliding into receivership, signed a deal with Parmalat for a 62 per cent stake for Sh2.5 billion.
But political meddling by the then Moi regime frustrated efforts to revive the company and put paid to the deal with Parmalat's South African subsidiary.
The injection would have been a big boost to KCC, but given the recent events in Italy, analysts see the failed deal as a blessing in disguise.
Parmalat's forays into the country were frustrated following its refusal to seek clearance from political power brokers before sealing the partnership with the Kenyan dairy firm.
The Italian company targeted KCC, which was Sh4.76 billion in debt.
Political involvement in Kenya's dairy industry has long been a source of controversy.
Politically correct boards ran down KCC from a profit base of more than Sh11 million in 1993 to a loss of Sh29 million in 1995.
Parmalat Finanziaria Spa, which has a strong dairy component, was declared insolvent by a court in Parma, Italy, on Saturday, about a week after it acknowledged it had overstated by about Sh372 billion its assets in 2002 financial reports.
The firm's founder and former chief executive, Mr Calisto Tanzi, has been detained by police, accused of market rigging, fraudulent bankruptcy and making false statements to auditors to hide a multi-billion-euro hole in the food company's balance sheet.
So far, its executives have told Italian investigators about a network of offshore companies used to make it look as if it had assets, although they did not exist.
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