Friday, April 6, 2012

Broken deal: Another firm given Sh900m


 SHARE BOOKMARKPRINTEMAILRATING
Billy Mutai | nation Auctioneers load furniture belonging to the National Cereals and Produce Board onto a truck on April 05, 2012 at the board’s headquarters in Nairobi’s Industrial Area.
Billy Mutai | nation Auctioneers load furniture belonging to the National Cereals and Produce Board onto a truck on April 05, 2012 at the board’s headquarters in Nairobi’s Industrial Area.  
By  Benjamin Muindi bmuindi@ke.nationmedia.com
Posted  Thursday, April 5  2012 at  22:00
IN SUMMARY
  • Taxpayer to pay through the nose after NCPB breaches contract, never mind that no maize was supplied by complainant
Auctioneers descended on National Cereals and Produce Board (NCPB) on Thursday sent by a maize supplier to collect Sh923 million — even though he did not supply a single grain.
Mr Jacob Juma, of Erad Supplies & General Contractors, was awarded the money through an arbitration process after he sued NCPB for breach of contract.
He was represented in the transaction by Nancy Baraza & Company, the former firm of suspended Deputy Chief Justice Nancy Baraza.
The auctioneers raided the NCPB headquarters and confiscated property of unknown value, including four vehicles, office equipment and furniture.
A brawl, complete with stone-throwing, ensued with NCPB staff accusing the auctioneers of attaching their personal effects.
Police, commanded by city boss Anthony Kibuchi, stepped in and ordered the auctioneers to halt the exercise.
“This exercise has been stopped until clear directions are given,” Mr Kibuchi told the auctioneers.
The NCPB later in the day obtained temporary orders stopping the auctioneers from attaching the property until their appeal is heard and determined.
Share This Story
30Share 
Erad signed an agreement with NCPB to sell it 40,000 tonnes of maize after grain reserves were depleted by drought.
The Ministry of Agriculture terminated the contract and Erad sued the cereals board for breach of contract.
It ended in arbitration by Mr Evans Thiga Gaturu who ruled in favour of Erad in July 2009.
NCPB went to court to challenge the award before Mr Justice J Njagi and lost. Their appeal before Mr Justice GV Odunga also failed this February, hence Erad’s decision to move in with auctioneers.
In 2006, Erad argued in a letter that it had furnished a performance bond of $916,000 after which NCPB was supposed to provide it with letters of credit.
Because of NCPB’s failure to honour its part of the deal, Erad was unable to supply the maize.
But it suffered loss, the company’s lawyers argued, which included loss of profits at the rate of $49 a tonne and $1,838,000 as the cost of storing the maize.
“Our instructions are to demand as we here do, your immediate admission of liability for breach of contract, after which we may delve into the issue of quantum of damages due to our client,” Ms Baraza said in a letter to NCPB.
The Nation did not see the ruling of the arbitrator, but NCPB’s lawyer, Mr Geoffrey Omenke, said Erad was awarded Sh800 million and interest.
In his ruling, Mr Justice Odunga observed that “the issue of public interest does not arise and the respondent (Erad Supplies) was entitled to proceed and have the award adopted.”
On Thursday, faced with a mountain of debt, NCPB said it has written to the anti-corruption agency to investigate what it claims was “tampering of arbitration process”.
“One cannot justify the loss of so much money from a public entity simply because a businessman’s contract was terminated by the government,” NCPB legal advisor Geoffrey Omenke said.
“All that the NCPB gave was a promise to buy the maize before the Ministry of Agriculture ended the contract when Treasury said it had no money,” Mr Omenke said. He added that the “issue of public interest should arise in this case.”
“We are awaiting another court decision based on our appeal to this case because we strongly believe there is a lot of corruption that went into it,” he claimed.
Mr Juma, defending his actions on Thursday, said that he was simply following a court order “that the government breached a contract,” and spoke no further.
Share This Story
Share 
In his proclamation list, he was supposed to claim, among others, 100,000 bags of maize, 100,000 bags of beans, 10 computers, office chairs, tables, photocopiers and vehicles.
The board’s spokesman Evans Wasike, who was injured in the scuffle, said the auctioneers were scheduled to claim the property at their Nairobi depot and not the headquarters.
“They attached property of the workers of the NCPB which was outside the proclamation list,” Mr Wasike said.
But NCPB is not the only government agency fighting off hefty debt for dishonoured transactions.
The National Social Security Fund (NSSF) has in the recent past paid Sh1.4 billion to three construction company. (READ: Agency probes NSSF over Sh2.8bn scandal )
The Efficiency Monitoring Unit has launched investigations into the payment following orders from the Prime Minister Raila Odinga’s office.

No comments:

Post a Comment