President Uhuru Kenyatta addresses the nation from State House, Nairobi on March 12, 2021.
Kenya Tea Development Agency Holdings Ltd (KTDA) has sued the government after President Uhuru Kenyatta ordered the election of directors in tea factories before May 12.
In a case filed before the High Court, KTDA argues that President Kenyatta has no powers to order the polls of a private company.
President Kenyatta through an executive order of March 12 directed the Tea Board of Kenya (TBK) to conduct elections in all tea factories within 60 days.
The President also ordered the AG Kihara Kariuki “to conduct an inquiry into the alleged statutory and regulatory compliance breaches allegedly committed by KTDA and its directors.”
This, the President says, include “potential price and auction manipulation, abuse of dominance, insider trading, wastefulness and breach of directors’ fiduciary duties.”
KTDA has hit back at Mr Kenyatta’s order, saying the decision was made without offering KTDA a hearing.
“The President has no iota of justification in law and or fact in seeking to interfere with the Petitioner’s lawful business, affairs and internal management,” KTDA said through its lawyer Benson Millimo.
He said the national government has no powers in law and fact to sanction and preside over the elections of directors of KTDA, its subsidiaries and shareholders.
KTDA emerged from the 2000 privatisation and is now owned by 54 tea companies, which, in turn, have more than 600,000 small farmers as individual shareholders.
The government is considering a takeover of the KTDA and have it revert to a State corporation, Agriculture Cabinet Secretary Peter Munya has disclosed.
Mr Munya told Senators that more than 70 percent of KTDA assets were acquired at a time it was a State corporation.
The State has previously taken over the New Kenya Cooperatives Creameries (KCC), Kenya Seed Company and Kenyatta International Convention Centre (KICC) from private hands and returned them to public management.
KTDA reckons a government-sponsored election of directors would result into the companies, including the agency, having two parallel sets of directors given the existence of board.
Mr Millimo said the move is an intention to take over, control and destroy the management, structure, operations and business of KTDA, its subsidiaries and its 54 corporate shareholder tea factory companies.
KTDA says it is an abuse of power for the Interior Cabinet Secretary Fred Matiang’i to direct the police to ensure that the elections are held.
Justice James Makau directed the lawyer to serve the Attorney General by close of business Friday and the case to be heard by Justice Anthony Mrima on March 23.
KTDA services cut across the entire value chain, and include inputs and agri-extension, transportation, warehousing, processing, marketing and financing.
In the Executive Order, President Kenyatta lamented that “KTDA’s network of subsidiaries, which includes offshore subsidiaries, are locked in inherent conflicts of interest and are also misaligned with the interest of tea farmers.”
The President ordered Mr Munya, the Attorney General and Cabinet Secretary for Industrialisation and Trade to take “immediate remedial measures to ensure that each of the subsidiaries of KTDA has separate governance structures, and that the profits from each of the subsidiaries, is reflected in farmers’ incomes.”
The inquiry will look into KTDA’s activities and those of its subsidiaries, including KTDA Management Services, Chai Trading Company, Kenya Tea Packers (Ketepa), Majani Insurance Brokers, Greenland Fedha, The Tea Machinery and Engineering Company, KTDA Power Company and the Dubai-based KTDA DMCC.
Another observation is that the setting of tea prices in Kenya “remains an opaque and exclusionary process that is sharply dissimilar from the process in other comparative jurisdictions. – businessdailyafrica.com