Firm recovers Sh300m from sale of National Cereals and Produce Board assets

By Isaiah Lucheli

Kenya: When the Court of Appeal restrained Erad Supplies and General Contractors from attaching the property of the National Cereals and Produce Board (NCPB), the firm had already recovered more than Sh300 million in a breach of contract suit.

The amount recovered by the suppliers after the sale of movable assets was part of a Sh500 million breach of contract debt awarded to the firm following arbitration after the State corporation cancelled a contract for the supply of relief maize. Erad had applied in court to sell immovable assets such as silos, land and other assets belonging to NCPB to recover the remaining Sh200 million when the appellate judges stopped the process that would have crippled the board.

The debt that paralysed the board’s operations last year can be traced to the 2004/2005 drought, which forced the Government to order for the importation of maize.

The country had a shortage of over six million bags of maize, forcing the Government to declare hunger a national disaster. As a result, the Ministry of Agriculture, through a 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.

Arbitration

Failure by the government to take an active role in the suit was partly to blame over the award as NCPB failed to appeal the award of the arbitration, which saw the suppliers get court orders to recover the money.

Efforts by the board through lawyer Katwa Kigen to block Erad from disposing movable assets of the board did not bear fruit and an attempt to file stay of proceedings at the Court of Appeal was rejected.

The State through its counsels failed to make an appearance on several occasions during the hearing of the matter despite the huge public interest the suit had generated, which had seen the supply of subsidised fertiliser delayed by more than three months. Erad was one of the five companies that had been contracted to supply the maize but Treasury failed to issue the company with the LC, which was a commitment that the maize supply would be paid for.