Sh279m NCPB pay came out of court order, Grace Wakhungu claims

Sirisia MP John Waluke (right) and businesswoman Grace Wakhungu when they appeared in an anti-corruption court in Nairobi for sentencing on June 25, 2020.

Photo credit: File | Nation Media Group

Graft convict Grace Sarapay Wakhungu has defended the Sh297 million she received from the National Cereals and Produce Board (NCPB) nine years ago, terming it legitimate payment.

Wakhungu yesterday told the High Court in Nairobi that, though she and her business partner John Waluke, the Sirisia MP, were paid the amount without supplying maize, the payment was justified.

Through Senior Counsel Paul Muite, Wakhungu explained that the payment stemmed from breach of contract by NCPB to supply 40,000 tonnes of maize.

While prosecuting an appeal against a 677-year sentence for Wakhungu over fraud, Mr Muite said the conviction was not only erroneous but the trial also lacked legal basis.

“The payment ... [was] pursuant to a High Court decree approving and adopting an arbitration award. Payments such as this cannot, in law and fact, form the basis of a criminal charge of obtaining money fraudulently. Any system of law that would allow payments made by the High Court to be the basis of criminal charges can only bring disrepute in the eyes of international justice,” said Mr Muite.

The lawyer said a company owned by Wakhungu and Waluke, Erad Supplies Ltd, had been contracted by the government in 2004 to supply maize after drought hit the country.

However, NCPB breached the contract by failing to give the company letters of credit upon securing maize abroad and preparing the consignment for shipment. Mr Muite said NCPB claimed that the National Treasury failed to allocate adequate funds for importation of maize.

Erad sued the state corporation at an arbitration tribunal for the breach of contract and was awarded damages. The award was for loss of profit, where it was awarded $1,960,000 (Sh227 million at current exchange rates) and storage charges where it was awarded $1,146,000 (Sh134 million). While appearing before Justice Esther Maina, the lawyer said the company later proceeded to the High Court for adoption of the arbitral awards.

The court ruled in favour of the company and attempts by the NCPB to review the rulings were rejected by three judges, paving way for execution of the judgment and the payments in 2013.

The lawyer said the payments formed the basis of the corruption case that culminated in conviction and sentencing of Wakhungu and Waluke for theft of Sh297 million from the public.

In the judgment passed in July 2020, the magistrate’s court sentenced them to a combined 136 years in jail and in the alternative, a combined fine of Sh2 billion. However, Mr Muite explained that the criminal trial was illegal and the same could not have commenced before setting aside of the arbitral award and the High Court judgment that endorsed the award.

“Such orders would need to be set aside first before there can be any suggestion of any criminality. Nothing like that ever happened in this matter. Our hierarchy of court demands that, once a higher court has made a finding or delivered a judgment, the same is binding to the lower court. It was not open to the lower court to open orders issued by the High Court,” he stated.

The court heard that there was never any doubt about the validity of the contract between NCPB and Erad Supplies Ltd, as well as the invoices.

“The appellants are in court because of a desire by the Director of Public Prosecutions (DPP) to be seen sending big fish to prison,” Mr Muite said. “This court should send a message that conviction is only when law and evidence demands so. In the current case, it demands they get released.”

He added that it was not in dispute that the reason maize was not imported was the express terms of the tender that NCPB would provide letters of credit to enable importation. NCPB breached the contract by failing to provide the letters of credit.

The lawyer said Wakhungu was convicted on matters that had already been adjudicated at the High Court and that the trial court rendered the judgment after giving in to intimidations.

“I ask court to take judicial notice of the public attacks that courts have gone through from the DPP [Director of Public Prosecutions]. The DPP said courts are the weakest link in the war against corruption. That was to bully the courts to convict even where evidence does not justify. The trial court gave in to the intimidations. Conviction should be on basis of evidence and the law. We ask this court to rectify the error,” stated Mr Muite.

Hearing continues.


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