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Setback for John Waluke, Grace Wakhungu in Sh300m maize scandal case
Sirisia MP John Waluke (right) and his associate Grace Wakhungu during a past court session. Waluke and Wakhungu would each have to pay a fine of more than Sh1 billion to avoid jail.
Sirisia MP John Waluke and his business partner Grace Sarapay Wakhungu have lost the bid for dismissal of an appeal filed by the National Cereals and Produce Board (NCPB) challenging the payment of Sh300 million linked to the long-standing maize supply scandal.
The dispute concerns the payment of $3,106,000 (Sh399,121,000) by the State-owned NCPB to Mr Waluke and Ms Wakhungu for maize supplies that were never delivered in 2004 in a tender meant for drought mitigation.
Through their trading entity, Erad Suppliers & General Contractors Limited, Mr Waluke and Ms Wakhungu wanted the Court of Appeal to strike out NCPB's appeal, describing it as incompetent for stemming from an arbitration award.
But the appellate bench comprising Justices Daniel Musinga, Mumbi Ngugi and Grace Ngenye-Macharia declined the request and ruled that the appeal, which was filed in 2012, was properly before the court and the same was ready for hearing.
The judges added that the application to strike out the appeal failed to comply with the Court of Appeal regulations, which require such a matter to be raised within 30 days after the filing of the appeal.
Erad filed the application on April 20, 2015, while NCBA record of appeal had been filed three years earlier on January 25, 2012.
"Ultimately, an application for striking out an appeal before this court must comply with the rules. The present application, having been brought three years and three months after the appeal was filed, fails to meet the mandatory provisions of this court’s rules. We therefore find and hold that the application is without merit and is dismissed," said the judges.
Chequered history
"It seems to us that the boat for striking out the appeal has long sailed," they added.
Given the age of the appeal and the chequered history of the dispute, the judges directed that the appeal be listed for hearing on a priority basis.
The ruling comes two years after the court admitted the Ethics and Anti-corruption Commission as a party to the appeal and permitted it to adduce additional evidence.
Last October, another bench of the Court of Appeal reversed the conviction and sentencing of Mr Waluke and Ms Wakhungu for irregularly obtaining over Sh300 million from the NCPB for the botched maize supplies.
Justices Stephen Asike-Makhandia and Patrick Kiage ruled in favour of Mr Waluke and Ms Wakhungu by setting aside penalties imposed by the lower courts while Justice Ali Abida Aroni declined to sign the judgment.
In the pending appeal, NCPB is seeking the setting aside of a High Court ruling dated June 28, 2011, issued by Justice Leonard Njagi, who endorsed the decision of an arbitrator, Mr Evans Gaturu, to award Erad Suppliers the sum of $3,106,000.
NCPB and Erad Suppliers had entered into a contract in 2004 for the supply of 40,000 metric tonnes of white maize.
In the contract dated August 26, 2004, the maize was to be supplied within four weeks from the date of the contract at a consideration of $160,000.
Court filings indicate that the maize was not supplied. Erad Suppliers contended that it was unable to supply the maize because NCPB had failed to open a letter of credit in favour of the company, contrary to the contract between them.
Erad Suppliers
The dispute was referred to a single arbitrator, with Erad Suppliers as the claimant alleging breach of contract by NCPB over failure to issue letters of credit to enable the importation of maize.
NCPB also filed a counterclaim before the arbitrator for Sh67.6 million.
Upon hearing the parties and considering the evidence, the arbitrator rendered his decision in favour of Erad Suppliers on July 7, 2009, after finding that NCPB had breached the contract by failing to open a letter of credit for Erad as agreed.
The arbitrator found that Erad was entitled to claim a total of $3,106,000 for loss of profit ($1,960,000) and $1,146,000 for storage on the basis that the company's suppliers had already stored the 40,000 tons of maize.
He also awarded interest at 12 per cent per annum from October 27, 2004, being the date by which Erad would have performed the contract had NCPB met its part of the bargain. The counterclaim was, however, dismissed.
Aggrieved by the arbitrator's decision, the NCPB filed an application in the High Court seeking to set aside the arbitrator’s award. The application was heard and dismissed by Justice Njagi, prompting NCPB to file the current appeal at the Court of Appeal.
NCPB claimed that the award was smacked of mischief, corruption and pure theft of public funds and was, therefore, against public policy.
Various applications seeking to stop the execution of the ruling were also filed and dismissed, and the arbitrator’s award was adopted as an order of the High Court in February 2012. Thereafter, Erad commenced the execution process.
