Top managers of Haco Tiger Brands, which billionaire businessman Chris Kirubi chairs and in which he owns a minority stake, have been fired after its South African parent company accused them of profit manipulation.
Tiger Brands said on Wednesday executives at its Kenyan unit Haco Industries manipulated numbers to reach targets for the financial year ending September last year.
The irregularities led to civil charges against Hacoâ€™s managing director Geoffrey Mwathi Kiarie, the firm said.
Another executive has also left the business, while at least three others may face sanctions.
Tiger Brands which bought a 51 per cent stake in Haco Industries from Mr Kirubi in 2008, said its group turnover for the six months to March increased seven per cent to Sh129.4 billion.
The Johannesburg-based firm, which has operations in Kenya, Cameroon, Ethiopia, Nigeria, and Zimbabwe, however, announced that its operating income declined by three per cent to Sh13.8 billion.
This drop, it said, was attributable to foreign exchange losses at in Nigeria business as well as profit manipulation and pre-invoicing at the Kenyan unit. Haco Tiger Brandsâ€™ operating profit to March 2014 declined by Sh879.1 million, a 30 per cent drop at the unit which the Haco South Africa has in the past described as strong.
â€œThey were key executives right at the top. It was difficult to pick this up,” Haco Tiger Brands chief executive officer Peter Matlare told Reuters in Johannesburg Wednesday during the release of the half year results.
Mr Matlare said that both external and internal auditors failed to pick up the irregularities, and that executives at Haco had been dismissed for the misconduct.
The companyâ€™s managing director at the time is also set to be face civil charges.
Haco deals in BIC brand of pens, personal and household care products such as Ace, Jeyes, Miadi, Motions, TCB, Bloo, and SoSoft.
â€œThe performance of the groupâ€™s Kenyan business was particularly disappointing,â€ Matlare said. â€œHacoâ€™s results were negatively affected by the effects of pre-invoicing and the manipulation of profits in the previous financial year. Appropriate corrective action has been implemented. The MD is out of the business, but we are instituting charges against him.â€
Mr Geoffrey Kiarie was Haco Tiger Brands MD from June 2012, when he took over from Mr Polycarp Igathe.