Njenga Karume Uses His Ministerial Position To Finance His Private Business Empire

These Old Folks Will Never Get It, Will They?

A senior Kenya government minister tries in vain to sell off large tracts of land in Elburgon, Nakuru. He is desperate for the cash to help him run his crumbling cash-starved empire. He never finds any buyers.

Then he has an idea. The government is trying to re-settle victims of the land clashes of the late 80s. So using his position in government he convinces the government to purchase his land. The money is not paid directly to him but to a company called Karume Investments. It is Kshs 169 million in total.

The press discovers the deal, but the government says that there is nothing wrong with the deal. That everything was done in a transparent manner. My foot! Will these guys ever learn?

The Minister was previously not able to find buyers for his land. So what did he do? He used his good offices. If this is not a classic case of conflict of interests, I don't know what is.

Let us not forget that in the run up to the 2002 General Elections, Njenga Karume's business empire was in desperate need of cash. I am infomred that they are not out of the woods yet. This was one of the reasons why he ditched a party which he had helped found and had funded to the tune of millions of shillings for "the project". In a move that left the opposition so shell shocked that they were speechless, Mzee Karume returned to Kanu, very sure that it was going to form the next government. It was never to be and a coalition involving the very party he had ditched ended up winning the elections. Somehow Karume went back hat in hand to his former partner and DP co-founder, now President, Mwai Kibaki. Before long Karume had found his way into government, courtesy of a so-called government of national unity.

It is clear that Karume's business empire cannot run smoothly without a little help from the government. In other words his businesses can hardly stay afloat without the sort of fundraising activities such as the controversial land deal that everybody in government says was above aboard.

For those who study big business, Njenga Karume's business problems started when he ditched a major cash cow of many years for what he thought would be a better deal.

A brief lesson in big business financing is in order. When you are running a number of companies, or one very large company, the key issue is always finance. And more importantly cash flow. Cash flow is the "blood" that circulates through the "veins" of a business. You can be a very healthy person, but if for some reason blood is unable to flow in and out of your heart, you'll die. The case is exactly the same with big business, irrespective of the sort of assets we are talking about.

It is now clear that what kept the Karume empire healthy and in fact helped it grow tremendously over the years was a valuable cash cow beer distribution business that collected and banked huge sums of cash daily.

Technically, Karume didn't really ditch his lucrative Kenya Breweries beer distribution business that covered colossal tracts of Central province and beyond. What happened was that he took on beer distribution for the whole country for a new brewer in the market then, a company called Castle Brewing of South Africa. Few competitors will be comfortable with one distributor distributing both their products. Especially when a new entrant comes in and wants to take advantage of a distribution network that the company helped Karume build over many years. KBL ditched Karume, Karume went to court and the rest as they say is history.

Karume won round one and was awarded hundreds of millions in damages. Kenya Breweries appealed and the award was revoked. They were the clear winners of round 2. And the battle rages, even as the legal costs continue to mount.

The good news for the Defense minister is that now it seems the Karume empire has secured another better cash cow for his business empire. Namely the government of Kenya.