Kenya sues former directors of ailing retailer

NAIROBI, June 6 (Reuters) - Kenya charged 12 former directors of ailing supermarket chain Uchumi UCHU.NR with fraud on Friday, the first prosecutions since the retailer nearly collapsed due to mismanagement two years ago.

A Kenyan court charge sheet named 12 former directors and two companies for conspiring to defraud the retailer by selling a building that housed one of its branches and then renting the same building back to the supermarket.

The insolvent chain was forced to close doors to customers for a month in 2006 but reopened after the government lent it 675 million shillings ($10.9 million).

"(They) conspired together to defraud Uchumi causing ... the property of Uchumi to be sold at 147 million shilling ($2.34 million)," the charges read.

"(It was) then leased back to Uchumi at a monthly rent of 1.7 million without a prior independent valuation (or) following an open competitive process and approving the said sale to ... a company associated with the core suppliers of Uchumi."

The court issued summons for the other 10 defendants to appear in court as only two were present.

The cash-strapped chain, Kenya's oldest, is now seeking strategic partners for a capital injection.

Trading of its shares at the Nairobi Stock Exchange has been suspended since it went into insolvency.

The company says an ambitious expansion strategy and inefficient management caused the firm's downfall but analysts blame the closure on huge losses from corruption, mismanagement and fierce competition. (Reporting by Humphery Malalo; Writing by Helen Nymbura-Mwaura; editing by Sue Thomas)