Court Awards former Uchumi supermarket CEO Sh6.5 Million

By Andrew Walyaula

Former Uchumi Supermarket CEO, Jonathan Ciano, has been awarded Sh6.5 million by the court for leave days, unused leave days and gratuity, terming his sacking seven years ago as invalid.

He was sacked in June 2015 on claims of gross misconduct and negligence that resulted in the listed retailers owing suppliers Sh1 billion.

High Court Judge Stella Rutto ascertained that the dismissal was invalid because Mr. Ciano had resigned two days before his ouster.

“The court arrives at the determination that Mr. Ciano effectively resigned on June 13, 2015, and his subsequent termination on June 15, 2015, by Uchumi Supermarkets Limited was null and void,” said Justice Rutto.

“There was nothing to terminate. Mr. Ciano had fired the first salvo and effectively extinguished the contract of employment. The termination by Uchumi was akin to flogging a dead horse.”

Mr. Ciano was awarded Sh6.5 in terminal dues June salary, 24 unused leave days, and gratuity.

“As there has been no findings on the unlawful termination, the claim for compensatory damages cannot be sustained,” said the judge.

Mr. Ciano, who helped revive Uchumi in 2006 when it was put in receivership and given a government-led bailout, was ousted along with the chief financial officer after the retail chain fell behind on supplier payments.

In court, the company claimed that the former CEO acted negligently and failed to exercise any reasonable care and skill expected of a CEO.

That as a result, the company suffered trading losses leading to its near-collapse and erosion of its stocks on the Nairobi Securities Exchange.

But Mr. Ciano denied the allegations and stated that he executed his duties with due diligence and to satisfaction since it was making profits during his tenure.

In his testimony, the former CEO said that he left when Uchumi’s value was at Sh7 billion and the outstanding loan was Sh182 million on the account of the ICDC.

Additionally, he defended himself saying he was never served with the report of the forensic audit commenced by the company upon his exit and it was never investigated despite presenting himself before the Directorate of Criminal Investigation (DCI).

CMA was allowed in February to investigate audit firm Ernst &Young on allegations that it aided cook Uchumi’s books, covering up transactions that left the retailer on its deathbed.

A three bench judge said that the audit firm failed to demonstrate the CMA breached its right to a fair hearing when it summoned E&Y executives in 2016 to shed light on Uchumi’s 2014 and 2015 audit reports, following a probe by the rival auditor, KPMG.

KPMG through the forensic audit report revealed that Uchumi’s accounts for the financial years 2010 to 2014 — prepared by E&Y as the retailer’s auditors at the time — contained misleading information.

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