The National Cereals and Produce Board has been asked to hand over to a National Assembly committee details of its dealings with a firm it says exists only on paper.
The legal tussle with Erad Supplies and General Contractors over a maize supply deal nine years ago has led to seizure of key NCPB bank accounts and paralysed the subsidised fertiliser programme.
It now threatens the national strategic grain reserve.
Agriculture Cabinet Secretary Felix Kosgey is set to appear before the Parliamentary Investments Committee on Monday as the team begins investigations into the deal that could eventually cost the taxpayer at least Sh561 million.
Officials from the Office of the Auditor-General have also asked to be given a copy of the documents.
The cereals board’s accounts have been attached, some of its assets auctioned and its work severely hampered because of a cancelled contract with Erad.
When the board’s top managers appeared before the Public Investments Committee (PIC) of the National Assembly yesterday, the chairman, Prof Gideon Misoi said: “This company (Erad Supplies) has never traded. They have no record. We could not even find their physical address.”
Erad directors are businessman Jacob Juma, Grace Sarapay Wakhungu and Sirisia MP John Waluke. The latter is a member of the PIC and was asked to leave the meeting after he declared his interest in the matter.
Mr Juma showed up at the committee meeting, but was told he would be invited formally and shouldn’t attend any other meetings even if they are open to the public.
Erad was reported to have taken possession of the Sh297 million the NCPB had in its accounts and is seeking Sh264 million more. To get the latter amount, the firm now wants to be allowed to sell the board’s assets.
Operations of the NCPB have been in a limbo following a legal tussle in which Erad is demanding Sh521 million over a cancelled maize supply tender.
Last week, Prof Misoi said NCPB was unable to deliver fertiliser because its bank accounts had been frozen.
“Whatever we are doing is with a lot of difficulty. This is threatening maintenance of strategic food reserve,” he said.
Erad was one of three local companies contracted by NCPB to supply maize urgently during a drought in 2004 that was declared a national disaster. None of the local companies supplied the maize, and the matter ended up in court where Erad won, leaving the board with a debt of more than Sh561 million it has been unable to pay.
Prof Misoi said the board had paid lawyers Sh30 million over the years to handle the matter in court.
The suit has not been heard since 2004, the committee was told, and the rulings have been made on the basis of applications.
Mr Irungu Kang’ata (Kiharu, TNA) said the board should submit evidence that its lawyers have sought to have the case speeded up at the Court of Appeal.
MPs wondered how the board even got itself entangled with a company that didn’t have a physical address and on which they appeared to have done no due diligence.
Prof Misoi also said there had been an attempt by Mr Moody Awori to intervene in the matter when he was Vice President. He was asked to provide details of that intervention.
Mr Barre Shill (Fafi, URP) suggested that NCPB had been set up to fail.
“I have served as a director at the NCPB. It has never been given a free hand to operate by the government,” he said. “There are lots of high people who have made NCPB a cash cow.”
The Cereals Board has until 2.30pm tomorrow to hand over the documents to the committee, which meets the Agriculture Cabinet Secretary on Monday.
Meanwhile, farmers in Uasin Gishu County have given the government a seven-day ultimatum to solve the crisis or face their wrath
“The government should urgently intervene and either comply with the court order or find a lasting solution to the legal battle between the supplier and the board,” said Mr Joseph Cherono, on behalf of the farmers.
The group expressed fears that the country might continue being food insecure over the disputed arbitration award.
The farmers said they want the case to start afresh so that all its merits and demerits can be brought to the public’s attention.
“Why the rush to take farmers’ assets that are worth millions of shillings over the debt yet nothing was supplied.
“Farmers stand to lose if they let NCPB stores to be sold off” said Mr Kipkorir arap Menjo, a director with the Kenya Farmers Association.
Ms Moira Chepkok said farmers suspected foul play in the manner in which the NCPB saga was being addressed arguing, influential people were out to undermine farmers.