The Kenya Pipeline Company (KPC) is fighting a fresh bid by Lebanese construction firm Zakhem to attach its bank accounts over a disputed Sh500 million debt.
In an application opposing plans by Zakhem International Construction Ltd to freeze the accounts in seven banks, KPC said the fresh suit is a ploy to revive a case that was settled in 2023. The application by Zakhem was filed barely two weeks after another application by the firm, seeking to freeze KPC’s bank account at Standard Chartered Bank over an alleged debt of Sh926 million, was dismissed by the High Court.
In the fresh case, Zakhem, through senior counsel Ahmednasir Abdullahi, wants KPC’s bank accounts at Equity Bank, Stanbic, KCB, NCBA Bank, Citibank, Co-operative Bank and Absa, attached to pay the debt. The construction firm says the money demanded was on account of interest.
“The respondent (KPC) has since settled the full agreed amount as per the consent and there is therefore no amount due and owing to the applicant. Further, the applicant had not disputed entering the consent or had it disputed the contents,” KPC’s acting chief legal officer Nelson Nyaduwa said in an affidavit.
According to Mr Nyaduwa, Zakhem had initially sued KPC seeking payment of $126 million (Sh16.38 billion). The High Court then issued a partial judgment on June 16, 2020, directing KPC to pay $44 million (Sh5.72 billion) to Zakhem. KPC appealed against the decision and as the matter was pending resolution, the parties entered into negotiations.
The corporation later released the funds but the Kenya Revenue Authority (KRA) issued agency notices, demanding tax from Zakhem. KRA successfully argued its case and KPC was forced to release Sh915 million to the taxman, while the balance of Sh485 million, was to be released to Zakhem.
KPC and Zakhem later signed a consent and the matter was settled on September 25, 2023. Zakhem, however, moved to court seeking to freeze the corporation’s bank accounts, demanding Sh926 million. The case was dismissed by Justice Josephine Mong’are who said that the construction firm was making the same arguments and tabulations that it made in the case that was settled. The judge said hearing the case would be akin to asking the court to sit on an appeal of a judge of the same jurisdiction.
Mr Nyaduwa said that during the negotiations, all issues, including the exchange rate and the amounts payable, were deliberated and agreed upon. “As regards EOT 1-4 in which the court awarded the applicant (Zakhem) $44,019,024, parties amicably agreed to the amount payable to the applicant after applying the requisite exchange rate,” he said.
Mr Nyaduwa said there was no enforceable decree that can arise from a case that has since been withdrawn.
Through lawyer James Kihara, KPC further said that filing a fresh case to claim judgment in another case was an abuse of the court process. He said KPC will suffer prejudice as its operations have been hampered, yet it is a public institution responsible for critical services in the energy, security and transportation of petroleum products from Mombasa to the hinterland.
Zakhem won the tender to build a 20-inch 45-kilometre Nairobi-Mombasa pipeline in 2014. The contract was to be completed in 18 months at a cost of Sh48 billion, but several disputes delayed its completion.
