A bitter row has erupted between two foreign businessmen contracted by the Kenya government to supply subsidised maize to the country last year.
The Sh1.5 billion subsidised maize
— which caused a political storm — has spilled into the Kenyan courts, amid signs the suppliers breached the subsidy conditions set by the Ministry of Agriculture, Livestock and Fisheries.
Belayneh Kindie, one of Ethiopia’s wealthiest businessmen, and London-based Cypriot Philippos Philippas were contracted to supply 70,000 tonnes of grain worth $15 million.
The duo was among the biggest beneficiaries of the Kenyan government’s Sh6 billion subsidised maize imported and sold to millers at low prices to arrest the shortage. This saw maize flour hit a record Sh150 per one kilogramme packet.
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Since the government terminated the subsidy programme on December 31 last year, maize prices have shot to more than Sh110 per 1kg packet, up from Sh90 during the election campaign.
The consignment was part of the controversial “Mexican” maize that created a huge political ruckus last year, when it arrived at the port in record time. Documents filed in court have also revealed that 30,000 tonnes of the consignment imported by the two businessmen are still stuck in a Mombasa warehouse owned by Grain Bulk Handlers Limited, due to the dispute. It is not clear what will become of the subsidised maize since the programme has ended.
The government had previously indicated that the maize was to be imported from Mexico but new details now show that some of the grain may have been sourced from Ethiopia, with Kindie as the supplier.
The two businessmen joined forces after the ministry of Agriculture awarded
Kindie’s firm a tender to supply 70,000 tonnes of maize, for which the Kenyan government paid the full Sh1.5 billion asking price last year.
The Ethiopian businessman secured the deal through his Addis Ababa-registered Belayneh Kindie Import and Export Company.
The Kenya government released the money in two installments — Sh1.2 billion and Sh300 million.
The second installment of Sh300 million is now the subject of a vicious court battle between Philippas and Kindie who has filed documents revealing details of the subsidy programme that the government kept a closely guarded secret last year when the controversy blew up.
The court battle before Justice Joseph Onguto also raises questions about the legality of the partnership between Kindie and Philippas. Suppliers were required to seek the Agriculture ministry’s permission before subcontracting or sharing the tender.
Philippas has sued his business associate through three companies registered in different countries — Liberia’s Huyton Inc, Switzerland’s Agricom International SA and the United Kingdom’s Agrimpex Company Limited.
The three firms have obtained a court order barring Belayneh Kindie Import and Export from interfering with the final installment of Sh312 million that the government deposited in its Guarantee Trust Bank account — unless it surrenders its cut of Sh265 million.
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Philippas claims that Kindie reneged on the agreement and cancelled transfer of funds due to his companies.But Kindie claims that he only had a contract with Huyton Inc, which breached some terms of the joint venture. He accuses Philippas’ firms of inflating its invoices to the Agriculture ministry.
The Ethiopian firm says Philippas’ firms did not pay for the 50kg bags used to pack the maize and other costs that it wants deducted from the final installment.
“I verily believe that there has been over-invoicing by Huyton by means of inflating the costs of freight, discharge costs, packing, surveyors’ charges and other relevant costs for the delivery of maize to the government of Kenya contrary to the joint venture agreement,” Kindie says in his replying affidavit.
Last year Kindie was listed by Forbes magazine as one of the five dollar multimillionaires to watch in Ethiopia.
His firm is the only one in Ethiopia allowed to export maize to East and Southern African countries following a directive from the Addis Ababa government last year. This was just days before the businessman signed a contract with Kenya’s Agriculture ministry.
Philippas on the other hand is a Cypriot national based in London. His three firms have subsidiaries around the world.