Tea farmers risk losing Sh3b with Imperial Bank collapse

Tea farmers are at the risk of losing close to Sh3 billion that a tea agency had deposited in a fixed deposit account at the now-closed Imperial Bank.

The Senate was yesterday told that by the time Imperial Bank was placed under receivership, Kenya Tea Development Agency (KTDA) had invested Sh2, 926,365,091 in a fixed deposit account, deposited in four tranches from May to the end of September 2015.

Responding to a statement sought by Kisii Senator Chris Obure, Ministry of Agriculture Principal Secretary Richard Lesiyambe, through the Senate Agriculture Committee Vice Chairman Henry Ole Ndiema (Trans Nzoia), admitted that the farmer’s savings could easily be lost given the current status of the bank.

Mr Lesiyampe told the House that the money at the Imperial Bank was part of slightly over Sh30 billion of farmers’ dues that had been deposited in various commercial bank accounts. The amount was to be withdrawn for payment of farmers’ final payments, just before the bank went under.

“KTDA was forced to use money earmarked for other obligations to cover the deposit held at the Imperial Bank. It was unfortunate that the bank was put under receivership when preparations to pay farmers their final payments were in top gear,” said the statement from the ministry to the Senate.

But the committee was unable to explain how the high interests earned by such deposits are shared out, forcing temporary Speaker Wilfred Machage to order Mr Ndiema to get a further statement from the ministry and furnish the House in two weeks.

Peanuts

Minority Leader Moses Wetang’ula had demanded to know if the interests earned benefits farmers, after it emerged that KTDA took the Sh 3 billion to Imperial Bank owing to its impressive interest rates.

Lesiyampe told the House that the deposits of Sh1.1 billion, Sh 800 million and another of Sh500 million deposited in Imperial on May 29, June 4 and June 16 respectively were to earn an interest of 13.1 per cent, while the fourth tranche of Sh521 million, deposited on September 25, was to earn 21 per cent.

“The deposits were made based on the attractive interest rates offered by the bank,” said the statement attracting queries from Senators who demanded to know if farmers get any benefits from the interests on their earnings.

“It could be that someone in management benefits from this interest yet farmers end up with peanuts, which are often paid late,” argued Mr Wetang’ula. Lesiyampe said that KTDA had