Court blocks bid to freeze KPC's accounts in Sh926M Zakhem dispute

A court gavel rests atop a desk. [File Courtesy] The High Court has dismissed a Lebanese firm's application to attach Kenya Pipeline Company's (KPC) bank accounts in a Sh926 million debt owed following a contract to build a pipeline from Mombasa. Justice Wayua Mong'are, in her ruling, said the money held at Standard Chartered Bank could not be used to offset the money owed to Zakhem International Construction Limited. According to her, Zakhem had filed another case seeking similar orders, which were previously rejected. She stated that the company could not revive the same issue again in a separate case "I note that in its present application, Zakhem is making the same arguments and tabulations that it made before the court in HCCOMM No. E322 of 2019. Zakhem cannot expect this court to make a dissimilar finding to that in HCCOMM No. E322 of 2019, as this would be akin to sitting as an appellate court on the findings of a court of concurrent jurisdiction, which the law frowns upon," said Justice Wayua. In its case filed before the Commercial Court, Zakhem sought to attach KPC's bank accounts held at Standard Chartered Bank, Equity Bank, and Stanbic Bank. The firm argued that despite being repeatedly ordered to pay the debt, KPC failed to honour its obligations. "The respondent is undeniably and unlawfully indebted to the applicant to the tune of USD 7.1 million (Sh926 million). Despite any tactics, manoeuvres, or attempts to delay or frustrate the execution of the decree, this debt remains due and payable. The respondent's continued evasion has not extinguished its legal obligation, nor does it diminish the applicant's right to recover the outstanding sum," argued Zakhem's lawyer, Ahmednasir Abdullahi. Mr. Ahmednasir explained that Justice Grace Nzioka had awarded his client USD 44 million (Sh5.6 billion at the current exchange rate) in 2020 and directed the parties to reconcile their accounts. He noted that the Kenya Revenue Authority (KRA) followed the judgment by demanding Sh5.1 million in tax. According to the lawyer, Sh1.1 million had been attached by KRA and retained by KPC. He added that KPC subsequently paid KRA Sh3.09 billion on October 22, 2020, and an additional Sh915 million on January 8, 2021, monies owed to his client. He asserted that from the computation, there remained USD 7.1 million that the corporation had not paid. The lawyer further explained that on January 6, 2021, Justice Ngenye Macharia directed that Sh485 million be released to Zakhem and paid in US dollars. "In compliance with Justice Ngenye's orders, the applicant obtained fresh warrants of attachment dated January 27, 2021, for the sum of USD 7.1 million, being the amount due and outstanding after deducting Sh3.09 billion and Sh915 million paid to KRA, and applying the correct exchange rate," said Ahmednasir. He added that Justice Ngenye issued further orders on April 8, 2021, requiring KPC to pay the contractor. Efforts to retrieve the money were frozen after Kenya Pipeline moved to the Court of Appeal. Nevertheless, he noted that KPC withdrew the case on March 11, 2025. He stated that the government-owned firm has bank accounts in three banks and that the funds held there exceed the amount owed. Zakhem's Managing Director, Ibrahim Zakhem, told the court that the dispute stems from a contract dated July 1, 2014, to construct KPC's Line One. He claimed that the total amount owed by the corporation to his firm was USD 126 million (Sh16 billion at the current exchange rate), including interest. Ibrahim further noted that before the hearing of the main case, his lawyers sought to have KPC struck out. Consequently, Justice Nzioka entered a partial judgment in favour of his company. Back-to-back court battles have plagued the multi-billion-shilling contract. Initially, Ruhpumpen Global Limited, a subcontractor, sued KPC, claiming that it had induced Zakhem to favour Ebara Corporation. Ruhpumpen's case was, however, dismissed. Fast forward to 2024, another subcontractor, Oilfields Engineering and Supplies Limited, moved to court seeking to recover money from Zakhem. It sought to freeze Sh4.1 billion that was to be paid to Zakhem by KPC.

Court blocks bid to freeze KPC's accounts in Sh926M Zakhem dispute

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Court blocks bid to freeze KPC's accounts in Sh926M Zakhem dispute

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