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Battle for control of duty-free shops at Nairobi’s JKIA back in court

By Kamau Muthoni | November 15th 2015
JKIA, Nairobi

NAIROBI: The battle for the control of duty free shops at the Jomo Kenyatta International Airport has gone back to court.

After the High Court dismissed an earlier case filed by World Duty Free challenging the award of tender to Swiss firm Dufry International AG by the Kenya Airport Authority (KAA), a consumer lobby group, COFEK, has filed a new case claiming operations of the company in Kenya were suspicious and that the procurement process that resulted in the award of the tender was skewed to favour the firm.

The lobby filed a case before the High Court on November 2 and attached letters addressed to and from different government officials questioning the agreement between the authority and the Swiss firm.

The first letter in COFEK’s court document was allegedly drawn by KAA’s chairman, Inspector General (rtd) of Police David Kimaiyo to former KAA Managing Director Lucy Mbugua, demanding an explanation about how the firm clinched the lucrative deal.

Another letter from suspended Roads and Infrastructure Principal Secretary Nduva Muli to Solicitor General Njee Muturi and the Public Procurement Oversight  Authority Director  General Maurice Juma requests a probe into the signing of the agreement.

The letter by the PS, according COFEK’s case file, had requested the formation of a team to investigate KAA Board’s resolutions with a focus on the former MD, Procurement Manager Hobadiah Orora, Corporations Secretary Catherine Kisila and  Finance  Manager John Thumbi.

At the same time, the lobby has attached a protest letter to former President Mwai Kibaki dated June 8, 2012 and written by Beth International Limited. The letter claims that the specifications in the tendering document were tailor-made to lock out local firms.

Sufficient capacity

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“Although Kenya has had sufficient capacity for running duty free retail businesses and have employed hundreds of Kenyans over the last 40 years, KAA had designed the technical specifications in such a way as to lock out all Kenyan companies in the sector from the tender. Technical specifications provide that bidders should provide a guarantee of USD 5 million, an equivalent of Sh425 million. Kenyans can only participate in the invitation or pleasure of the foreign firms,” the protest letter reads in part.

COFEK, through its lawyer Kakai Kissinger, claims that it has legitimate fears that the deal to operate 751 square metres of retail space, including duty free shops, foreign exchange services, communications, food and beverage outlets, until 2024 short-changed the consumers and the public at large.

“The petitioner has legitimate fears that the second respondent’s (Dufry) interest is anything but pro-consumer. The first respondent remains vulnerable to massive  claims to the offending concession agreement should it be challenged at  a later date,”  the document, filed on November 2, reads in part.

The consumer body told the court that the Dufry International AG has another entity, Dufry Kenya, and there were  fears that the subsidiary may receive illegal commissions. According to Cofek, the company was registered under the names of two Spanish nationals and a Kenyan but the three do not have any shareholding in the local firm.

The Stephen Mutoro-led organisation claimed that Angel Martinez Suarez, Xavier Rossinyol Espel (both Spanish) and one Shantilal Khimji, a Kenyan, were booked as  directors of Dufry Kenya but the Swiss-based company held  the majority stake of 60 per cent followed  by  another company from the  same  country (Dufry Participations AG) which held a 40 per cent stake of the subsidiary.

“It is  unclear why the second respondent has registered another entity Dufry Kenya Limited under NO J52413015387,” the court heard. Cofek, in its court papers, alleged its  fears over the Swiss firm’s business  involvement were heightened by other revelations in Mauritius where its operations were  also being  questioned by the authorities .

“The Prime Minister and Minister for Rodrigues, responding  to the  questions in Parliament, confirmed that the second respondent signed an exclusive supply contract for  goods to be sold at the Mauritius Duty free Paradise Limited in Mauritius  and Rodrigues and management agreement for more  than one billion rupees .”

“He added that an objection to departure was lodged to prevent  two representatives of  the second respondent from leaving  Mauritius. He added  that the Government of Switzerland provided evidence to the Government of Mauritius that various companies were formed to receive ‘illegal’ commissions,”  the  petition further read.

The lobby says that investigations were  in vain as  the deal had already been sealed.

It now wants the court to stop KAA from handing over the site to the Swiss firm and also to halt implementation of the concession agreement until the case is heard and determined.

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