How two court cases gave KFC leeway to import chips

Some 18 years ago, farmers in Nyandarua County accurately diagnosed their biggest problems in the potato and vegetable sectors as being lack of storage, value addition and a stable market.

They made a bold move to address their problems by registering a public company -- Midlands Limited.

They then approached then-President Mwai Kibaki’s administration to be allocated a suitable site on which to develop the agro-processor.

The government allocated the farmers 25 acres at Njabini through the Settlement Fund Trustee (SFT), a government parastatal.

This is where Midlands factory, a multibillion-shilling crop processing plant owned by Midlands Ltd, stands.

With a starting membership of about 3,000 farmers and meagre funds, Midlands struggled but eventually had a modern factory constructed on the land. It started operations in 2012.

But before the operations started, the farmers, led by then Midlands Ltd chairman, Mr Junghae Wainaina, approached popular fast food eateries such as Steers, KFC and Chicken Inn, among others, and hotels that included Fairview and Sarova hotels to supply them with ready-to-cook vacuum-packed chips, or French fries.

While the others had no problem, KFC was specific about the varieties of potatoes it wanted, which were not locally available. The varieties were available in the Netherlands. 

In July 2012, the Midlands management, led by Mr Wainaina and a group of farmers, took a benchmarking trip to the Netherlands to get the varieties KFC required.

“We brought 10 varieties of the potatoes, three of which are what KFC uses, and it agreed with us,” said Mr Wainaina.

Storage of potatoes

The trip was partly sponsored by the Dutch Government. The Netherlands has a very developed market industry for potatoes, among other horticultural crops.

When contacted about Mr Wainaina’s assertions, Mr Jacques Theunissen, the KFC chief executive for the East African region, did not confirm or deny them. He, instead, referred us to Mr Takalani Simeli, in charge of KFC’s communications. 

“For any media enquiries, please contact our media relations lead,” said Mr Theunissen. Mr Simeli did not respond to our email enquiries.

But before the sourced potato varieties could be developed, nine years ago, the Ethics and Anti-Corruption Commission (EACC) struck a debilitating blow that shattered the dreams of the farmers and many who had invested in Midlands.

This meant that the eateries had no choice but to import their potatoes, leaving the local farmers to count their losses in wastage through lack of proper storage.

Operations at the factory included cold storage of potatoes with a capacity of 6,000 tonnes, production of chips at a capacity of 2.5 tonnes of finished product per hour and dehydration of three tonnes of all sorts of fresh produce a day.

The factory can also manufacture livestock feed from vegetable waste, rejects and peels. But this now remains a mirage as the factory rots away.

Yesterday, Mr Wainaina defended KFC against accusations of not sourcing its potatoes locally and instead accused the government of creating the mess and loopholes that have continued to impoverish local farmers.

“Look no further for the mess in the potato industry in Kenya; the government is the culprit. KFC and others are innocent. They are just taking advantage of the mess in the sector -- for which the government is squarely to blame -- to import the potatoes,” said Mr Wainaina.

“The government has not only played politics when it comes to the making of economic sense of the potato sector, but it also has carelessly killed the local initiative,” he added.  

Midlands' collapse

In 2013, just months after the Jubilee administration had assumed power, EACC, then known as the Kenya Anti-Corruption Commission (KACC) instituted a land recovery suit against the factory at the High Court in Nakuru.

The anti-corruption agency claimed that the land was allocated to the farmers irregularly.

The case, a civil matter, would later be transferred to the Environment and Land Court in Nyahururu.

The EACC argued that the land belonged to the Ministry of Agriculture, which had been using it for potato seed multiplication project before the “irregular” allocation.

Even before the civil suit could be heard and determined, the anti-corruption agency filed a criminal case in Nairobi against then Lands Minister Amos Kimunya, now Kipipiri MP, accusing him of being one of the masterminds behind the irregular allocation of government land to Midlands.

Former director of Land Adjudication and Settlement at the Lands Ministry Lilian Njenga, Midlands Ltd and Mr Wainaina were also charged. The company and the director were accused of fraudulently acquiring public property.

Operations at the Midlands plant collapsed. Investors shied away from injecting capital in the venture, and clients withdrew because of the “corruption” label the company had acquired courtesy of the court cases.

When Midlands closed down, it was supplying popular eateries like Steers and Chicken Inn, among others, with ready-to-cook vacuum-packed chips.

However, on May 20, 2020, six years after the criminal case was filed, the senior principal magistrate at the anti-corruption court in Nairobi, Mr Felix Kombo, dismissed the fraud charges against Mr Kimunya, Ms Njenga and Mr Wainaina.

"The prosecution case herein was doomed and left hanging by the thread," Mr Kombo said in his judgment.

Fraud allegations

"Having been acquired and registered under SFT, a public entity, the plot remained as a public plot subject to lawful mandate of the SFT," the magistrate said as he gave the Midlands land a clean bill of health.

The EACC did not appeal against this judgment. Contacted for a comment yesterday, the CEO, Mr Twalib Mbarak, instead referred this writer to Mr Philip Kagushia, EACC’s head of corporate communications, who had not responded by press time yesterday.

Despite the court determining that there was no evidence to prove the fraud allegations in the criminal case, the EACC now says it will proceed with the land recovery suit in Nyahururu. 

This is notwithstanding that the civil suit is dependent on the testimonies of the same witnesses who testified in the collapsed criminal case.

Interestingly, SFT was neither a complainant in the two cases nor was it among those charged in court. 
Area farmers have, on numerous occasions, petitioned the EACC to withdraw the case so that operations at the Njabini factory can continue.

Mr Charles Rasugu on behalf of Mr Mbarak, said the recovery of the land was in the interest of the public.

“While we take note of your case in support of the project on one hand, the commission on the other hand has the legal duty to seek recovery of public land in the interest of the public,” says a letter of October 13, 2020, signed by Mr Rasugu.

The letter was in response to Mr Samuel Hungu, a farmer, who petitioned the EACC on behalf of the Nyandarua farmers.

“The commission will, therefore, not be withdrawing the suit at this late stage but rather pursue it to its logical end. We remain hopeful that this will be finalised in due course,” Mr Rasugu added.

But even as EACC says it will pursue the matter, it appears that it is not ready to expedite the prosecution of the case.

Company's fate

For at least two years, the EACC has been requesting adjournment of the case whenever it comes up for hearing.

Mr Wainaina said the actions by the EACC could be a ploy “to have the case delayed deliberately so that farmers get tired and eventually give up”.

“This is nothing but politics of arrogance and discordance in government. Why would EACC hold down the economy of a country?” wondered Mr Wainaina.

With the EACC case, the fate of the company remains unclear, as are the dreams of thousands of farmers. 

Three years before the court ruling, the County Assembly of Nyandarua had arrived at the same conclusion after deliberating on a petition on the issue of the Midlands property presented by farmers.

Consequently, the county assembly resolutions presented to the EACC, the Ministry of Agriculture, and copied to the Nyahururu High Court, where the land recovery case had been transferred, resolved that the land had been properly allocated to the farmers’ company.

The county assembly also argued that the factory was crucial to the economic development of the county, and that, therefore, the national government should withdraw the land recovery case.

To have a glimpse of just how desperate the sector is for such investment in Nyandarua, the county government is struggling to complete a 1,000-tonne potato storage plant in Ol Kalou.

According to Mr Wainaina, the county government is also said to be soliciting funds from the national government and donors to put up a potato processing plant in Ol Kalou.

“As a “logical” conclusion is awaited, local investment is wasting away. Local initiative is being undermined by the very government that is supposed to promote and encourage it. Foreigners are taking advantage of their terms to the detriment of farmers,” said Mr Wainaina.

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