What you need to know:
- In his heyday he styled himself as a Bible-thumping crusader against corruption but, as recent court documents show.
- Jacob Juma was a sly fellow with dirty connections all over, from the corridors of justice to the executive boardrooms of the political class.
- Sirisia MP John Waluke and Grace Wakhungu convicted for their role in the scam.
Jacob Juma was boisterous to a fault. He was not only emotionally dishonest, but also wore the mask of a whistleblower in public. Soon, the mask became his face, and that is why at his funeral service, some mourners – and naively so – never thought they were paying tribute to a thief and a smart alec. Some perhaps knew him quite well and had come to bury one of their own.
Juma ran a company, Erad Supplies and General Contractors, through which he did his dirty work. Among his partners was Grace Wakhungu, a former general manager at Kenya Reinsurance and a veteran in the tender business. Grace was well-connected.
Juma’s other partner was John Waluke, who had in 2002 vied for the Sirisia parliamentary seat on a Kanu ticket.
Their dramatic story starts with Mwai Kibaki’s 2004 Cabinet, which approved the importation of four million bags of maize duty-free in order to cover a shortfall that had left 3.3 million people exposed.
The then Agriculture minister Kipruto arap Kirwa on August 4, 2004 promised Parliament that an inter-ministerial committee would monitor everything and that maize imports by the National Cereals and Produce Board “will be conducted transparently and in strict compliance with the existing government regulations”.
The trio of Wakhungu, Waluke and Juma won a tender to supply 40,000 metric tonnes of maize but had no desire to deliver a single bag, something king of intimidation Jacob Juma had perfected. He had mastered the art of tiring entities through courtroom battles, where he would have an upper hand.
Once the trio got the NCPB bond, the only thing it delivered was a bid bond from I&M Bank. But there was something written at the back of the bid bond, and which nobody at the tender committee, perhaps, saw. It was that the bid bond would only be valid upon receipt of a letter of credit for $1 million (Sh100 million) from NCPB.
What that meant was that this bid bond was not valid and the tender would not have stood because NCPB, and it has said as much, was not obliged to open a letter of credit before the shipment of the goods.
To Erad, NCPB had a duty to open the letter of credit to facilitate the maize importation, but in the contract NCPB would only have paid upon delivery.
But did Erad have any maize? No, and it has now emerged that after they failed to import any maize, they started intimidating NCPB to pay them for damages, alleging that the board had failed to honour its part of the commercial contract. Jacob Juma knew how to play this game and had the right contacts on his speed dial.
The board also made a counterclaim of Sh67.6 million, arguing that Erad, or rather Jacob Juma, Waluke and Wakhungu, were in breach of the contract and the board had suffered loss as a result.
By that time, they had not realised that even the bid bond was invalid and as such the entire contract was fraudulent.
The disputed 2007 General Election resulted in a murderous wave of post-election violence and, eventually, a coalition government that brought together Raila Odinga and Mwai Kibaki. Kirwa was defeated at the ballot and the Agriculture docket was given to William Ruto.
It was during the tenure of the Coalition government that Erad invoked the arbitration clause and the dispute was referred to Evans Gaturu, a city advocate, who was appointed as arbitrator.
In order to solidify their claim, Wakhungu had forged a document from Chelsea Freight, a South African company, to confirm that they had indeed purchased maize from Ethiopia through Djibouti for $180 per metric tonne.
They told Mr Gaturu that they intended to sell the maize at a price of $229, meaning they would have made $49 per metric tonne. They calculated their total loss, plus the storage charges, to be $3,106,000, which is approximately Sh310 million.
On January 26, 2009, at about the time the matter was being referred to arbitration, the Ministry of Agriculture sent home the entire NCPB board and dismissed 12 of the 17 senior managers.
At the news conference held at his Kilimo House boardroom, Mr Ruto appointed Dr Andrian Wekulo, Elias Barre Shill, Rozaah Akinyi, Mohammed Islam and Timothy Busienei into the new board. He did not touch Chairman Jimnah Mbaru, who was Kibaki’s appointee.
Whether this had any bearing on what was to follow is not clear, but NCPB had been in the news with allegations of corruption. The ministry had commissioned an audit at NCPB and Ruto used the report to oust the entire board, saying corruption would have no place in maize procurement.
What we now know is that on July 7, 2009, Erad was awarded $3.1 million as damages for the abortive contract. It was also awarded interest at 12 per cent per annum from October 27, 2004, “being the date by which the claimant would have performed the contract had the respondent played its part of the deal”.
"mischief, corruption and pure theft of public funds”
For its part, NCPB argued that Erad had no maize and that they had previously indicated that they had bought the maize at $221, meaning that they could only have earned $8 per metric tonne and not the $49 awarded by the arbitrator.
Interestingly, neither the NCPB nor the arbiter checked whether the invoices tabled were genuine. Also, the arbiter dismissed NCPB’s arguments that Erad had not provided a performance bond, and that by the time it did, there was no money allocated for maize purchase.
The board was dissatisfied with the award and on October 5, 2009 sought to have it set aside, arguing that it smirked “of mischief, corruption and pure theft of public funds”.
And that is where the judicial circus commenced. Erad hired city lawyer Ahmednassir Abdullahi to argue its case. Specifically, the board asserted that Erad had no maize for delivery within the contract terms. But efforts by NCPB to be listened to by the courts suffered a hitch and they were asked to first honour the determination of the arbiter.
It had been brought to the attention of the High Court, for instance, that Ropack CC International, the company allegedly contracted by Erad to supply it with maize, was actually registered with South Africa’s Department of Trade to offer financial intermediation, insurance, real estate and business services.
More so, the company claimed to have offered storage, namely Chelsea Freight, was registered for air transport.
Although NCPB told Justice Njagi that the entire arbitration process was a circus, the judge was not persuaded that a case for setting aside the award had been made, and so on October 28, 2011 he threw out NCPB’s application. With costs.
By this time, Jacob Juma had become the face of Erad Supplies, but the Mwai Kibaki administration did not seem eager to pay the money.
However, months after Jubilee took over the government from Mwai Kibaki, an order was issued on June 15, 2013 by Justice Mabeya for the attachment of NCPB accounts and properties.
Attempts to have the execution of these orders stayed were dismissed by the Court of Appeal and, as a result, NCPB had to forfeit the cash. Some of its properties were attached as a result.
NCBP had an account at Barclays Bank which had Sh297 million. This amount was transferred to a client account at Soita and Saende Advocates, which paid Sh79 million to the lawyers handling the case.
While both Wakhungu and Waluke received Sh90 million, it is interesting that the bulk of the money, Sh127 million, went to an unidentified person. Whoever took that money, it appears, was the kingpin of this scam.
NCPB’s funds in various banks were raided and dished out while auctioneers raided its yard and left with vehicles and furniture. There are still other applications in court by Erad to attach various pieces of land owned by NCPB.
But this matter did not end there. After NCPB was frustrated in the courts, the matter was now taken over by the Parliament. It was the House Committee that unearthed what the courts had failed to appreciate: that the entire award was based on fraudulent papers.
When NCPB tried to introduce this new evidence, as it continued to pursue its money, Erad’s lawyer Ahmednassir Abdullahi told the court that the intention of the board in seeking to introduce the report was to intimidate the court and procure the setting aside of the award. He further submitted that one of the recommendations by the board was that members of the Judicial Service Commission be investigated for bench fixing, corruption and abuse of office in connection with the handling of this case.
That was the first time the term “bench fixing” was used in the court, and this was a serious allegation that could bring down the entire Judiciary. Through this practice, the courts are managed such that a case goes to a particular magistrate or judge, who has already been compromised. This was a serious allegation and Ahmednassir said the report was designed to cast aspersions and scandalise the court.
In between, in 2016, Jacob Juma started masquerading as a whistleblower and became an ardent critic of the government. On his Twitter handle, he dropped names of those who were out to kill him. Finally, he was killed by unknown assailants. The case remains cold.
Meanwhile, another application by the Ethics and Anti-Corruption Commission to adduce additional evidence that would demonstrate that no storage charges in respect of Chelsea Freight were incurred by Erad Supplies was dismissed.
EACC detectives had travelled to Durban, South Africa and visited the Chelsea Freight offices on the 14th Floor of John Ross House, where managers denied not only dealing with maize but also owning a warehouse. They also denied dealing with M/s Luis Dreyfus Africa (Pty) or M/s Ropack CC International, who, according to Erad, had been contracted to supply the maize.
These documents had all along been tabled by Wakhungu as genuine and the courts did not look at them until Justice Mumbi Ngugi made a ruling on May 21, 2020, when Wakhungu and Waluke sought to stop the criminal case against them.
“This is one of the documents that was, I believe, at issue in the charges against the petitioners before the trial court,” said Justice Ngugi.
“It is an issue that the petitioners have not responded to at all, maintaining only that there was an arbitral award in their favour. If storage charges were based on a fraudulent document, it may well be that no maize had been ordered and the award in respect of alleged loss of profits may also have been unmerited and therefore a fraudulent acquisition of public funds.”
It was this case, and the determined efforts by the EACC and the prosecutors, that finally saw both Waluke and Wakhungu asked to pay more than Sh2 billion or face a lengthy jail term. It illustrates the circus that goes on within Kenya’s courts.
God help the taxpayer.