House team told of top officials’ role in Sh561m NCPB scandal

Trucks delivering maize at an NCPB depot. The cereals board has been brought to its knees by Erad General Suppliers and Contractors, a firm it contracted in August 2004 to supply maize on an emergency basis. . FILE PHOTO  Nation Media Group

By JOHN NGIRACHU jngirachu@ke.nationmedia.com, Tuesday, June 18  2013 

In Summary

• Erad’s other directors are Sirisia MP John Waluke and Ms Grace Sarapey Wakhungu, former Vice-President Moody Awori’s sister.
• The involvement of Mr Ahmednassir Abdullahi, who represented Erad’s case at the High Court objecting to the setting aside of the award of Sh500 million to them, has also been questioned.

Get annoyed! That is what lawyer Katwa Kigen told members of the Public Investments Committee to do when they asked him how to address the national cereals board crisis.

The reason, Mr Kigen said, was the nature and history of the case that has resulted in the imminent collapse of the National Cereals and Produce Board (NCPB).

The cereals board has been brought to its knees by Erad General Suppliers and Contractors, a firm it contracted in August 2004 to supply maize on an emergency basis.

Mr Kigen is among many who are convinced, and he told the committee as much, that so connected is Erad that every other decision in the disputes between it and the NCPB has been in its favour.

With the frustrations piling, the lawyers have advised NCPB to have its trustees pay off Erad so the board does not collapse entirely.

“Eventually, the trustees have responsibility. We lose all our applications in court, all their vehicles have been attached, their land, dryers and stores have been taken. I wouldn’t be surprised if the MD is using a motorbike or taxis to get around. All vehicles have been attached,” said Mr Kigen.

Contract cancelled

The dispute between Erad and the board started soon after its contract to supply maize was cancelled. It had by then not supplied a single grain and the four weeks within which it should have delivered the maize had elapsed.

Erad then sued for breach of contract. It claimed that it failed to deliver the maize because NCPB did not give them a Letter of Credit, which would have been a guarantee to its suppliers that it would have paid for the maize. That was not in the contract, said Mr Kigen.

When the two teams decided seek arbitration, they took the matter to one Evans Gaturu. Mr Gaturu awarded Erad seven times what they had asked for, said Mr Kigen, and it was later reported that he had been given Sh3 million by Mr Jacob Juma, Erad’s managing director.

Erad’s other directors are Sirisia MP John Waluke and Ms Grace Sarapey Wakhungu, former Vice-President Moody Awori’s sister.

NCPB moved to the High Court on a provision in law that they could challenge the award in arbitration as a matter of public policy. But Mr Justice Leonard Njagi, who was later declared unfit to hold office, refused to reopen the matter, meaning Erad could go ahead and get its money.

The long and short of it, said Mr Kigen, is that the case has never been heard and the rulings have been made on technicalities. Erad had initially been awarded only Sh22 million, but that amount has grown to the Sh561 million it is now seeking.

“Nobody has ever heard us on whether the claimant (Erad) should be paid for storage,” said Mr Kigen. Erad has asked to be paid for storing maize yet there has never been evidence that it bought the maize in the first place.

“We’ve been told that we’ve exhausted our time at the High Court,” Mr Kigen told the committee, as he explained why the matter has been taken to the Court of Appeal.

Erad has used these rulings to attach the board’s accounts, auction its vehicles and is now going after its property.

The involvement of Mr Ahmednassir Abdullahi, who represented Erad’s case at the High Court objecting to the setting aside of the award of Sh500 million to them, has also been questioned.
Uncomfortable

Mr Kigen and Mr Joshua Nyawara said they and other lawyers have been uncomfortable with the fact that Mr Abdullahi is a member of the agency that hires, promotes and can institute the firing of judges yet he represents clients in court.

“The very funny thing that happens is that every time we rush to court to stop the execution of orders against NCPB, Erad’s lawyers are there. They’re not there because they are magicians. Someone tells them we’re going,” said Mr Kigen.

Whenever they want to have matter decided ex-parte (without the other party represented), a tactic often used by Erad, the file goes missing from the registry, he said.

NCPB has sought to strengthen its legal team as the case has gone up the rungs in court. For the Court of Appeal, it has added the respected Mohammed Nyaoga to the team.

“The matter has a chaotic and stinky history,” Mr Nyaoga told the MPs. He said the problem is within and outside the NCPB given that from the start, Erad should not have been given the contract.

Mr Lamek Achika, the manager in charge of audit at the Kenya National Audit Office, told PIC that Erad was awarded the contract when it had a bank overdraft of Sh3 million and owed its suppliers a further Sh7 million.

“This company could not, according to minutes of the board’s technical evaluation, supply the maize. But it was cleared to supply the same under mysterious circumstances,” he said.

Mr Juma is yet to have his day before the committee. He showed up at its meeting with the NCPB managing director Gideon Misoi and his team last week but was stopped from making any statements. The committee’s investigations are parallel to the court process.