Cartels in the tea sector are believed to have invented a way of working with former Kenya Tea Development Agency (KTDA) bosses to frustrate the new board chaired by Chege Kirundi. Audit exposes financial mismanagement at KTDA as former top officials seek to regain influence through legal fights.
In a cocktail combination of former directors and board chairmen, the ring of cartels now under investigations by the Directorate of Criminal Investigations is out to fight policy programs outlined by Kirundi.
Engineered by former Director Kennedy Omanga, former Chief Executive Officer Lerionka Tiampati and Peter Kanyango the cartel has also teamed up with former board chair Enos Njeru, his predecessor David Ichoh in efforts to derail reforms at the agency.
The trio of Kennedy Omanga, Peter Kanyago and Lerionka Tiampati was kicked out of office in 2021 following the Presidential Executive Order issued in March the same year to pave the way for investigations into possible corruption at the agency.
The Executive Order No. 3 of 2021 directed the Attorney General to investigate KTDA for regulatory breaches and this culminated in the appointment of a new KTDA Board in June 2021.
Peter Kanyago got replaced as chairman to the board by David Ichoho who was later replaced by Enos Njeru. Consequently, all senior management across all KTDA’s subsidiaries were replaced and, at the same time, sparked a flood of court cases that still bleed the organization to date.
The cartel has from last year thrown its weight behind Njeru who took over in July 2023 and fought tooth and nail to block the appointment of Chege Kirundi as new board chairman.
After losing the court battle to block Kirundi from occupying office, Njeru has been working behind the scenes alongside cartels that have controlled the sector to oppose the new reforms proposed by the government.
A court ruling threw out his petition over lack of merit paving way for a new era and putting the agency on the reform path.
History of the cartel
The Audit report done by a multi-agency team and chaired by former Attorney General Paul Kihara implicated various senior officials at KTDA and made recommendations for prosecution by relevant state agencies.
The report stated that as at June 8, 2021, there were cumulative loans of Kshs 4,233,433,663.46 billion from Citibank, Proparco and Absa Bank guaranteed by KTDA. There were also Asset finance loans offered by Co-operative Bank, Absa and Standard Chartered Bank amounting to USD 1,291,627,562.26 which were signed against fixed deposits of Ksh 5,947,947,607 held by KTDA in various banks.
“In considering how irrational borrowing is done at KTDA, there is a possibility that the organisation may have over committed itself,” the report states.
The report also indicated that the former KTDA directors did not disclose debt exposure by deliberately failing to register charges and mortgages to each borrowing made in accordance with section 8B3 of the Companies Act.
Following this, the report recommended that KTDA-H Group Head of Legal should be prosecuted for professional misconduct and negligence for failure to ensure the preparation of charges and mortgages.
Other recommendations
Remit funds for tea sales to the tea factories in accordance with Section 36(6) of the Tea Act 2020 which requires that 50 percent of tea sales should be paid to the farmer within 30 days.
All debentures must be registered at the company registry by August 31, 2021 and the board should strengthen its risk management policy related to company borrowing to confirm that KTDA-H borrowing limits are followed.
Senior management of KTDA involved in approving purchase of rocky land LR.No 10024/4 IR.27609 at Ksh 59,400,000 be surcharged.
Those involved in purchase of Nyandarua / Olbolsat swampy land at Kshs. 28,003,500 be surcharged and those involved in approving Sh 38,164,469 million as legal fees be surcharged as well.
That there was direct loss of Ksh 370 million by KTDA MS at the expense of Kagwe Tea Factory Company Ltd. Arising from this loss Kagwe Tea Factory Company Ltd had to borrow money to finance its operations.
Total mess
In total some 620,000 small scale tea farmers lost over Ksh 600 million in dubious transactions by top officials at KTDA as per the audit report.
The cartel has been reaching out to fraudulent suppliers who had almost brought KTDA to its knees as they plot legal battles aimed at curtailing Kirundi and his team from working effectively.
The new development comes at a time the agency has rolled out plans to present a new strategic plan in July 2025 under the leadership of Chege Kirundi.
KTDA has lately been managing the smallholder tea factories, where farmers receive big bonuses, a move that the former bosses want to fight even though they were the ones who started it.