KTDA digs in as Kinoti summons senior managers

Senior managers at the troubled Kenya Tea Development Agency (KTDA) are expected to appear this morning at the Directorate of Criminal Investigations for interrogation. This comes after several farmers sought the help of the DCI to unravel how hundreds of millions of shillings have been used to pay legal firms.

But KTDA through its lawyer has told off DCI boss George Kinoti over the summons, saying he has no jurisdiction to investigate the agency’s officials.  “Our client only answers to its shareholders and no other person,” lawyer James Ochieng Oduol told Mr Kinoti in his reply.

Over the weekend, Mr Kinoti sent summons to the KTDA officials led by Chief Executive Officer Lerionka Tiampati, asking them to report to the DCI headquarters today at 9am to assist the detectives who are “investigating a case of conspiracy to defraud…which I have reasons to believe that you (have) information which can assist me in my investigations.”

Mr Kinoti has asked the KTDA officials to also submit an audit of its lawsuits and documents relating to its retained lawyers as farmers continue to put pressure on the company over poor pay and insider trading.

It is not clear whether Mr Kinoti will also summon the KTDA directors too, who have been using their private companies to trade with the agency as suppliers.

Also summoned together with Mr Tiampati is the KTDA Company Secretary, Dr John Omanga, Head of Procurement Brown Kanampiu, Head of Finance Simeon Rugut and Lincoln Munyao, the head of audit.

Although Mr Kinoti said failure to comply with the summons constitute an offence liable to prosecution, the KTDA seems to be digging for a fight and has asked Mr Kinoti to either withdraw the summons or they will seek legal redress.

“As a private company, our client’s matters relating to its legal affairs, inclusive of law suits and lawyers retained in those law suits, remains a private company affair,” Mr Oduol told Mr Kinoti.

The KTDA lawyer says t the DCI “has no jurisdiction whatsoever or at all, to seek that our client does account to your goodselves on its legal affairs, including disclosure of its lawyers and related documents.”

Last week, Agriculture Cabinet Secretary Peter Munya told a parliamentary committee that KTDA is a public company. He described the organisation as a “militant opponent” of regulations together with East African Tea Trade Association, the company that runs tea auction.

“KTDA is a public company in at least three senses: It is owned by Kenya’s 650,000 small-holder farmers through their tea factory companies; It was a government parastatal that was handed over to farmers as part of liberalisation of the tea sector. It has custody of a large pool of public assets paid for by tax-payers from which it continues to make profits for which it has paid no value. In this sense, it is a trustee of public property,” the CS told the National Assembly Committee on Delegated Legislation.

During the session, KTDA surprised observers after it hired four law firms to represent its various subsidiaries. These were Ngatia & Associates representing the tea factories managed by KTDA Management Services, G&A Advocates representing KTDA Holdings and Management Services, Millimo Muthomi and Company Advocates representing KTDA Holdings and Iseme Kamau & Maema representing KTDA Power Company Ltd.

Public participation

KTDA told the committee that it was opposed to the regulations proposed by Mr Munya after President Kenyatta ordered for the streamlining of the tea sector – since there was no public participation and they would disturb the running of the sector.

Another opponent to the Munya reforms was East African Tea Trade Association (EATTA) – which runs the tea auction platform in Mombasa. EATTA told the committee that the new regulations do not add value and if implemented will make Kenyan tea un-marketable across the globe. But in his reply on EATTA’s position, Mr Munya posed: “They are an auction manager. Why are they against tea being sold in their auction? If you open a shop and you don’t want many customers, there must be something wrong with you.”

Growth measures

EATTA members have previously been accused of corrupting the tea auction system and running a non-transparent platform, which had allowed brokers to thrive at the expense of the farmers.

Mr Mwangi Kibichio, who appeared for EATTA, termed the new regulations as unnecessarily restrictive, not alive to the reality on the ground and ambiguous; hence might be prone to abuse by authorities.

“The regulations are largely silent on development and growth measures, relegate reduction of taxation and regulation burden and concentrate on marketing and trade rules where governmental roles and levying aspects are magnified,” Mr Kibichio said.

While the tea agency has accused Mr Munya of publishing the regulations without consultations, he told the committee last week that he received presentations from the company.

“KTDA should be an agent of farmers, but it has engineered a role reversal in which KTDA-HL and its associated companies have become the principal and the factory companies, the Agents,” he said.

“The farmers — as principals —have lost their right to recall the agency, and KTDA opposes their right to sell directly at the auction; to recruit their own company secretary and to manage their elections according to their own Articles of Association which specify one man one vote.”

Seven factories

At the heart of the summons are petitions signed by farmers from seven factories, who complained that KTDA had billed the factories tens of millions of shillings for a case filed in 2019 and in which the other litigants spent Sh500,000. In the letter addressed to Mr Kinoti, the farmers had asked him “to demand a forensic audit of all KTDA law suits and their ensuing costs.”

Murang’a-based Gacharage Tea factory had also sent a separate petition after KTDA sent a prepared resolution asking them to approve the appointment of a top-notch Nairobi advocate to oppose the tea regulations in court.

Although the factory told KTDA that it is not opposed to the reforms and has asked the agency to furnish farmers with the expected bill since the amount of money to be paid to the law firm was not indicated, it has now emerged that KTDA listed Gacharage as among the companies that have agreed to hire the top-notch lawyer.

“Previous experiences shows exorbitant charges were incurred when the law firm was contracted to challenge a case…the case cost the farmers a whopping Sh70 million,” said the protest letter from Gacharage and signed by its official, Paul Kagema.

In their Senate petition, KTDA through their advocate Benson Milimo told the committee that CS Munya in publishing the new regulations introduced unnecessary regulatory bureaucracies, a move contrary to section 3 of the Crops Act, 2013. President Uhuru Kenyatta had on January 14 issued directives to clean the tea industry and restore profitability and hope to thousands of farmers.

In particular, President Kenyatta called for reforms in KTDA, tea brokerage, auctioneering and the stakeholders to seal corruption and embezzlement loopholes.

Following the directives, CS Munya published new regulations, which propose that tea farmers who market their produce through KTDA will be paid 50 per cent of the delivery monthly with the rest paid as bonus annually.

Retained earnings

Previously, farmers were being paid by KTDA factories 14 to 16 shillings per kilo monthly, with the bulk of the money, which is the retained earnings, paid in October.

In the new reforms, individual tea factories will also be allowed to sell their produce at the tea auction, outlawing direct sale overseas. The CS further said any teas that are not sold during a particular auction shall be re-listed for sale during the subsequent auction. The reform also calls for automation of the auction process in the next two months to promote accountability.

More so, buyers of the green leaf will have to deposit a down payment of 10 per cent with the balance paid before export of the purchased consignment. In turn, factories are required to pay farmers 30 days after receiving the auction proceeds.