Questions as it emerges that KTDA chairman is a tea broker

 Records have emerged indicating that Mr Peter Kanyago, the board chairman of the embattled Kenya Tea Development Agency, owns a tea brokerage firm, in a clear conflict of interest in the tea industry.

This has raised questions why the East African Tea Traders Association (EATTA), the auction platform, allowed a producers’ representative to own a brokerage company – and whose interests he represents within KTDA.

While KTDA is appointed by farmers as its agent to the brokers, records from the registrar of companies indicate that Mr Kanyago is a shareholder of Atlas Tea Brokers through his company, Geopet Investments Limited. Other shareholders of Geopet include his business partner George Kamau Muhoho. Geopet is an acronym for George and Peter.

According to Rule 5 of EATTA, broker members undertake not to act in any transaction in tea “in which it or he or any of its or his partners, directors or assistants are interested, directly or indirectly as seller, buyer, shipper or otherwise.”

Conflict of interest

Until recently, Atlas was a broker for Imenti Tea Factory but today deals mainly with tea from Rwanda.

Reached for comment on Friday, Mr Kanyago, who has been at the helm for 26 years, at first denied association with Atlas Tea Brokers but when shown the CR12 evidence he said: “Despite being said that I am a shareholder, the brokerage firm has never traded with KTDA and it only transacts business with tea sellers from Uganda, Tanzania and Rwanda among others.”

But he refused to come clear, on whether there is conflict of interest, choosing to sidestep the question about Geopet and invoking principles of fair justice “where you cannot lead me to provide evidence and prosecute against myself”.  Mr Kanyago said he cannot be accused of acting in conflict of interest “since Atlas and neither Geopet has ever transacted business with KTDA.”

 He said he is ready to be held accountable in an event that the two companies ever traded with KTDA or he influenced any dealing either directly or indirectly with them in a way that committed his person, signature or office in the deal(s).

A tea broker earns a commission for every sale from both the producer and the buyer and Atlas is one of the largest broker in the industry.

Another company with shares at Atlas Tea Brokers is Pennant Trading Company, which is owned by Nicholas Munyi, a former EATTA chairman, which means that the brokerage is owned by insiders in the tea industry.

Stop reforms

While Mr Kanyago’s KTDA board has been battling the government to stop reforms in the multi-billion shilling sector, which have been stymied for years due to insider interests and cartels, it has never emerged that he has interests in a brokerage firm.

The new revelations are going to jolt the tea industry where past titans at the agriculture ministry have been tea brokers. Another director at the Atlas Tea Broker is former Agriculture PS, Dr Romano Kiome.

 The reforms, proposed by Cabinet Secretary Peter Munya, seek to bring down, among others, the amount of commission paid to the brokers by the tea factories and also the amount of money charged by KTDA as an agent. It also seeks to end the sale of tea by brokers through private treaties thus bypassing the auction house.

Poor bonus

On Friday, the Parliamentary Committee on Delegated Legislation, which was touring parts of Murang’a came face-to-face with angry farmers protesting the poor bonus paid this year.

Currently, there is uproar in the tea industry after KTDA paid its worst end year bonus – a move that has damaged its standing among farmers. It also came at a time when the giant tea firm is in court together with EATTA to stop regulations to streamline the sector.

This week, Mr Kanyago appeared to soften his hard-line stand against CS Munya and called for dialogue between KTDA and the government. He also said that if the government wanted to turn KTDA into a parastatal it has to pay the farmers billions of shillings.

While Mr Kanyago said KTDA is not opposed to the reforms, the body he leads together with the East African Tea Trade Association, which runs auctions in Mombasa have contested the same reforms in court.

According to Samuel Mugwe, a prominent tea farmer in Murang’a County, “This is one of the most important phase in the tea industry. There is no doubt that the government is by daybreak edging out KTDA’s near criminal grip in the sector… If it is about the money to pay the implementation bills, it will not cost a farmer more than Sh3 per kilo for just one season to win freedom for the next many years.”

He said tea farmers have been losing income to unilateral fiscal decisions by KTDA directors for the past 40 years cannot compare with the estimated cost of implementing the tea reforms as pushed by Mr Munya.