Why Diageo’s EABL directors could face a US$300m fine
The directors of the Diageo-owned East African Breweries Limited (EABL) could be set to pay multi-billion dollar fines for disregarding a Supreme Court order related to beer supply.
According to East African press sources, EABL’s former supplier Bia Tosha Distributors has insisted the directors to be fined an equivalent of 20% of EABL’s sales, equal to KSH39 billion (US$300 million), for refusing to relinquish beer distributorship routes across parts of Nairobi, Machakos and Kajiado.
Last month, the Supreme Court ordered EABL to reinstate Bia Tosha on the contested routes following a suit that has been in litigation since 2016.
Bia Tosha has revealed to the Supreme Court that EABL has “sponsored” the present distributors to sue at the High Court in an effort to try to derail the implementation of the apex court’s order.
In documents filed in court, Bia Tosha, managing director Anne-Marie Burugu said: “The respondents have acted with reckless abandon and with total contempt for the authority of this court, have continued to infringe upon the applicant’s distribution areas.”
Diageo has been contacted for comment on the situation, but has so far stayed quiet on the issue.
Last summer, Diageo made another big move in its beer journey in Africa when it agreed to sell its Guinness Cameroon business to Castel Group for £389 million in an effort to accelerate Guinness’ growth and “provide the best outcome for the brand”.