alexa Farmers file class action suit against KTDA over losses - Daily Nation

Farmers file class action suit against KTDA over losses

Sunday January 26 2020

KTDA CEO and secretary face Senate committee

KTDA Holdings CEO Lerionka Tiampati and Group Company Secretary Ken Omanga face the Senate Committee on Agriculture, Livestock and Fisheries over a petition concerning the challenges of small scale tea farmers, July 23, 2019. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

BENSON WAMBUGU
By BENSON WAMBUGU
More by this Author

Three petitioners have lodged a class action suit against Kenya Tea Development Agency Holdings Ltd and its affiliates over alleged exploitation and subjecting them to economic hardships through inefficiency and mismanagement.

Ashford Koome, Gibson Bundi and Patrick Muthuri, on behalf of tea farmers in Meru County, have sued KTDA Holdings Ltd, KTDA management Services Ltd, Kionyo Tea Factory and Greenland Fedha Ltd. They want a thorough audit of the books of accounts as well as an inspection of weighing bags and scales, arguing that those have been used to exploit the farmers economically.

Kionyo Factory is a tea processing company based in Meru while Greenland Fedha is a non-deposit-taking microfinance lender wholly owned by KTDA Holdings.

The three petitioners are members and shareholders of Kionyo and in extension shareholders of KTDA Holdings.

The High Court has directed KTDA and its affiliates to respond to the petition for hearing and determination.

According to the suit papers, the trio says they have been contracted by KTDA, which supplies them with green leaf weighing bags, weighing scales and services, transportation, tea processing, as well as conduct tea auction and marketing. And through deductions on their tea earnings, they pay KTDA for goods and services.

Advertisement

The petitioners argue that they are not only contractually obligated to the shareholders for the supply of the goods and services but KTDA also owes them a corresponding duty of care.

“But because of inefficiency, mismanagement, deliberate goods and services overpricing or deceit, they have breached the terms of their contracts and the plaintiffs’ consumer rights.

“The defendants have also failed to secure and protect the shareholders’ economic interest and well-being, resulting in low and stagnant monthly tea payments and erratic bonus payments in the past five years,” say the petitioners.

The farmers are also accusing KTDA of using fuel, which they term as an outdated energy resource and supplying to them overpriced fertiliser.

KTDA is further accused of using underweight weighing bags and faulty weighing machines, leading to losses.

“They have failed to account to the petitioners and other farmers the interest earned on their tea produce sales generally throughout the year and in particular between June 30 when the financial year closes and October 30, when ‘bonus’ is actually paid to farmers,” reads the petition.

They accuse Kionyo of selling their tea through a “sister company”, Imenti Tea Factory, which pays bonus at a higher rate than Kionyo but pays the shareholders at a lower rate.

The tea farmers claim they have suffered massive financial losses and violation of their consumer rights because of the breaches and wrongful acts.

They say these acts can only be ascertained through independent inspection and certification of the weighing bags and scales and taking proper audit.

They want the court to declare that the growers’ fertiliser and personal insurance contracts are unilateral, skewed and unfair.

They are also seeking orders that the loan contract is unfair, overpriced and oppressive.

The shareholders want to be at liberty to sell their produce to buyers other than those affiliated to KTDA Holdings, without interference or reprisals. They also ask the court to order an inspection of the tea weighing bags and scales and an audit of the bank and books of accounts.

The petition comes in the wake of claims by a legislator in Kirinyaga County that cartels in KTDA were using faulty weighing machines to exploit farmers. Gichumu Githinji, the Gichugu MP, said farmers lose earnings because the weighing machines are adjusted, with each farmer losing 1.5kg of produce delivered at tea buying centres.

Recently, President Uhuru Kenyatta directed the Agriculture ministry and the Competition Authority of Kenya to strip KTDA directors of roles  as a recourse aimed at recouping gains for tea.