What you need to know:
- Despite farmers’ complaints about poor payments, KTDA had maintained a business-as-usual stance.
- KTDA filed dozens of suits in court which sought to stop anyone from interfering with its activities.
On Thursday last week, several letters were dispatched from the Kenya Tea Development Agency (KTDA) headquarters in Nairobi to all the 62 factory managers of the various KTDA-run entities ordering them to take 30-day compulsory leave.
The thinking was that, in the struggle by farmers to have a say in the running of their factories, the Factory Unit Managers had been used by their employer, KTDA, to frustrate the newly-elected boards, which are now eager to unearth how billions of shillings were stolen or otherwise misappropriated in the entities by brokers, traders and cartels.
Even after the new KTDA board took office and sent home five senior managers at the headquarters, including the CEO, Mr Lerionka Tiampati, the factory managers had somehow stayed put.
The Sunday Nation understands that the newly elected boards, from the factory level all the way to the headquarters, had the backing of two Cabinet Secretaries – Mr Peter Munya (Agriculture) and Dr Fred Matiang’i (Interior) – who had been instructed by President Uhuru Kenyatta to help tea farmers wrest entities from the cartels that had seized the sector. In essence, Dr Matiang’i and Mr Munya had disrupted a massive tea party, and not everyone who was going to leave without a fight.
The elections and the change of guard were swift, partly because for the first time in decades, the big bosses at the headquarters had no say on those who were to vie for the various positions. As a mark of authority and a declaration of change, the CR12 documents held by the Registrar of Companies were quickly changed to reflect the changes and end the domination of KTDA directors in micro-managing the factory boards to their advantage.
On June 21, the new KTDA chairman David Ichoho sent a letter to regional managers asking them to “recognise all the newly elected board members and immediately commence working with them and fully facilitate them to effectively take over and run their respective factories”. Mr Ichoho had replaced Nyeri-born tycoon Peter Kanyago, who had been at the helm of KTDA for over two decades.
Mr Kanyago, who it is understood has interests in a tea brokerage firm despite being the KTDA chairman, had led a board that had been accused on several occasions of resisting efforts to streamline the sector and bring a sense of transparency to its operations.
Myriad of cases
For years, despite farmers’ complaints about poor payments, KTDA had maintained a business-as-usual stance by dragging to courts any person who queried the running of the tea behemoth, which had been described variously as a structure awkwardly devoid of governance rules.
While tea farmers were the shareholders of their factories – registered as limited liability companies – they could not elect their directors without the approval of KTDA, which prequalified those to run. That way, all alternative voices were knocked out at the prequalification stage by an entity that prequalified, supervised and still appointed a committee to hear complaints against it.
Using the billions of shillings at its disposal, KTDA managed to hire a team of lawyers and instructed them to file a myriad of cases against anyone who raised concern. Parliament heard recently that KTDA also used such legal fees as conduits to siphon farmers’ money. The matter was to be examined by the Directorate of Criminal Investigations but the High Court barred detectives from scrutinising the payments. It is not clear whether the investigations will proceed any time soon.
In March, President Kenyatta directed Mr Munya to oversee a probe of the KTDA, its top officials and its subsidiary companies. In the directive, contained in an Executive Order No 3 of 2021, the President also directed Attorney-General Kihara Kariuki to conduct an inquiry into allegations of statutory and regulatory breaches in the last decades.
But KTDA challenged the government in court and the inquiry was suspended pending the hearing. By then, officers from DCI had raided the KTDA headquarters on confiscated documents.
The disquiet among the former KTDA officials is that the newly elected board will drag them into an inquiry aimed at exposing the cartels that had for ages operated in the farmers’ company; and that the new KTDA leadership will cooperate with the detectives, withdraw all the court cases, and leave them vulnerable to legal processes.
Those who were sent away on compulsory leave in the June 21 letter by Mr Ichoho include the once-powerful company secretary John Omanga, managing director Benson Ngari, and general manager ICT David Mbugua. According to Mr Ichoho, whose board was inaugurated by Mr Munya, the compulsory leave “is to allow for the necessary investigations and determination of culpability for any malpractice and possible abuse of office”.
Just before the leave directive, the former KTDA directors had issued an unsigned statement asking the “public to ignore any pronouncements and declarations” by “people” who “purported to distribute amongst themselves positions at KTDA Holdings Limited”.
“The KTDA Holdings Limited PLC board has not been reconstituted and remains in office, intact,” they noted.
But as they issued the statement, police had been deployed at the entrance to the headquarters to keep off the previous board members. The hostile take-over had been completed right under their noses, but they couldn’t smell it.
Before the assets of the former KTDA were handed over to the current KTDA Holdings without any payment, the government used to have a say on the management of the tea sector through the Tea Board of Kenya as a regulator.
But a rogue or inept Parliament and a robust network of cartels in the industry not only killed the Tea Board of Kenya, but also allowed the creation of a structure that was hardly supervised, yet it was still a public entity. The Tea Directorate, an underfunded entity at the Ministry of Agriculture, could hardly match KTDA’s muscle and lobbying power, both within Parliament and in the counties –and even within the Judiciary.
“It became very hard to penetrate KTDA and get the truth, even when we knew they were spending hundreds of millions of farmers’ money to stay in power,” says Mr Irungu Nyakera, a former PS who has had court battles with KTDA.
When Kericho Senator Aaron Cheruiyot crafted the Tea Bill in 2018, lack of goodwill and politics slowed down its passing and it was not until a year later that movement was seen after KTDA was exposed as cartel-tainted.
It was only after Mr Munya took over from former minister at the Agriculture docket, Mr Mwangi Kiunjuri, that the future of KTDA became a point of discussion even at the Cabinet level.
In January 2020, President Kenyatta, in a speech that sparked off the current efforts, observed that low tea prices and delayed payments were frustrating farmers.
“KTDA has delivered a lot of value to farmers in the past but some operational and governance challenges have emerged in the last few years,” said the President. “
Key among these is conflict of interest by directors and lack of clarity in the declaration of dividends by subsidiary companies. It is clear that the governance of KTDA and the entire marketing of tea will require to be restructured if we are to assure our tea farmers get more revenue from their tea sales.”
And with that, the die had been cast.
Although President Kenyatta directed the Ministry of Agriculture to “immediately explore the option of KTDA paying farmers no less than 50 per cent of their deliveries as monthly payments with the balance being paid as annual bonus”, this directive faced hurdles as KTDA sought safety at the courts.
With the signing of the Tea Bill into law, it had been thought that KTDA would soften its stand. It didn’t. Instead, its leadership not only organised the factories to challenge various clauses of the new laws, but also filed their own cases against CSs Munya and Matiang’i.
The new management at KTDA is promising to stop the court cases, and the hope is that focus will now be on the welfare of farmers even as investigations into any forms of malpractice gather pace.