The Treasury wants Parliament to dismiss a petition by former employees of the defunct Kenya Cooperative Creameries (KCC) who are seeking Sh204.5 million in unpaid dues after nearly three decades.
Treasury Cabinet Secretary John Mbadi told the Senate committee on Labour and Social Protection that a three-judge bench of the Court of Appeal on July 10, 2020, held that New KCC Limited was not liable.
“The prevailing legal position - as affirmed by the Court of Appeal - is that, since the termination of the employees occurred when KCC Ltd was under private management and in compliance with Section 3(1) and (2) of the Transfer of Business Act, there is no established legal obligation upon the government,” Mr Mbadi said.
“Consequently, the National Treasury respectfully maintains its view that the petition be dismissed.”
The former employees of the defunct KCC have petitioned the Senate over unpaid terminal benefits, non-remitted Maziwa Sacco deductions, and provident fund contributions totalling Sh204.5 million.
The unpaid dues relate to the period before KCC’s receivership where staff whose jobs were affected by the institutional transition and legal complexities that followed.
The petition involves outstanding payments related to their employment with the original KCC, and not the current New KCC.
Former employees represented by lawyer Namada Simoni are seeking resolution of the long-standing issue.
“We have filed a case at the Court of Appeal seeking to have the decision to be reviewed,” Mr Simon told the committee when he appeared before it with the ex-KCC staff.
“In the meantime, this committee should find an innovative mechanism to help the former employees who are now in their 70s and are struggling with medical bills."
The Senate is scrutinising the petition in a bid to secure justice for three former employees, many of whom are now elderly.
The committee, chaired by West Pokot Senator Julius Murgor, is seeking to establish whether the New KCC, which acquired assets of the original KCC, also assumed the liability for employee dues.
A three-judge bench at the Court of Appeal overturned a High Court ruling that had held the New KCC liable.
The court, however, expressed hope that the Attorney General would advise the government to settle the dues.
Appearing before the committee on Wednesday, August 19, 2025, Mr Mbadi said following the strong judicial advisory in the appeal ruling urging the Government to give due consideration to address the employees’ dues, the State Department for Cooperatives sought legal opinion from the Office of the Attorney General.
“Pursuant to the advice given, a multi-agency committee is being constituted, with the lead of the State Department for Cooperatives, to review the matter comprehensively and explore the possibility of viable actionable steps, especially in areas where administrative or policy interventions may be warranted beyond the strict confines of the law,” Mr Mbadi said.
Mr Mbadi told the committee that in 1999, Kenya Commercial Bank (KCB) placed KCC Ltd under receivership.
He said in 2000, through the Receiver Manager, Price Waterhouse Coopers, KCB sold the KCC Limited to private individuals who incorporated KCC (2000) Ltd.
“Subsequently, 196 KCC Ltd employees were retained, and the rest were terminated and paid in line with existing laws at the time,” he said.
“On June 6, 2003, the government bought back all the assets that had been sold to KCC (2000) Ltd and later in 2004 registered the New KCC Ltd as a State Corporation.”
Mr Mbadi said the assets were transferred through a vesting order free from all encumbrances issued on November 15, 2005 by the High Court.
He said in accordance with the Transfer of Business Act (TBA), section 3, a public notice was done regarding the government purchase of the business and assets of KCC (2000) Ltd.
“The claimants did not object to the notice or make any claims, and thus section 8 of the same act came into effect that a claimant cannot institute a claim in respect of any liability once due notice was given and has become complete (six months' notice was given,” he said.
“It is worth noting that the dispute was instituted more than 10 years later. In the year 2013, the claimants filed suit No.1299/2013 against New KCC Ltd and the government of Kenya seeking to be paid the sum of Sh204,472,555.20 at the High Court.”
He said the matter was heard and concluded and the High Court made a finding that New KCC Ltd was liable to pay KCC Ltd’s former employees' dues.
“Subsequently, New KCC Ltd filed an appeal against the High Court decision at the Court of Appeal under Civil Appeal No.191 of 2018,” Mr Mbadi said.
