By Isaiah Lucheli
Nairobi, Kenya: The staggering debt of Sh500 million that is threatening to cripple National Cereals and Produce Board (NCPB) operations can be traced to 2004 drought that hit the country.
At the time, the ravaging hunger was declared a national disaster as the country had a shortage of over six million bags of maize. The Ministry of Agriculture’s letter reference number MOA/LMD/F.10/9A Volume IV/39 dated July 19, 2004 instructed NCPB to purchase two million bags of maize for famine relief and strategic grain reserve.
Five firms were awarded tenders for the supply of the 180,000 metric tonnes of maize but only two companies supplied, while the rest, including Erad, defaulted but moved to court. Erad is associated with Grace Wakhungu (managing director) and Major (rtd) John Waluke (Sirisia MP) and Jacob Juma as co-directors.
Erad took NCPB for arbitration as provided for in the contract for alleged breach where they claimed damages. The said NCPB had breached contract by not providing an irrevocable or confirmed sight letters of credit.
On its part, NCPB maintained that the contract was explicit and self-explanatory as to the obligations of each party as the payment was independent from delivery of the consignment, which Erad failed to deliver.
Cereals board claim that the arbitration process was marred by allegations of corruption and interference as there were attempt to influence the ruling of the arbitrator and the allegations were recorded in the proceedings.
The arbitrator awarded sums that were not prayed for as Erads documents suggested that it was going to make profit of Sh685 per metric tonne of maize supplied but the arbitrator awarded Sh4,165 per metric tonne and storage fee. The board moved to the High Court as it felt the arbitrator was neither fair nor objective.
However, NCPB lost the case.
They moved to Court of Appeal where they lost case twice.
