Very Long Read: Genesis of Peter Munya's orchestrated KTDA State Capture

STATE OF CURRENT AFFAIRS AT THE SMALL HOLDER TEA SECTOR

KTDA AND ITS MANAGED TEA FACTORIES

INTRODUCTION

The last two (2) years from 2020, the Kenyan tea sector and specifically the smallholder tea sub sector has gone through a tumultuous period. This has affected the smooth running of affairs of the industry and has seen the sale of small holder Kenyan teas at the auction drop, with other countries taking up the space.

Many of the above effects are as a result of an unprecedented and unfortunate interference in the running of the Industry by State players under the guise of tea reforms. The Industry and the smallholder tea sub sector is in need of urgent intervention to reverse the events that have led to a downward spiral affecting the industry.

Herein is a brief of the state of affairs of the tea subsector:

TEA REFORMS

Tea Act 2020

• 17 of 74 Sections of the Tea Act 2020 were challenged by several stakeholders in the Tea Sector including:BometCounty Government, KTDA & Factories, East African Tea Trade (EATTA) Multinationals (KTGA)& Employees of KTDA,

• The affected 17 sections of the Law were challenged for their breach of the Constitutional Order and Rights of the parties.

• In 2021, the ConstitutionalCourt stayed the implementation of the 17 Sections pending determination of the respective matters.

Executive Order No. 2 of 2021& Interference of the Smallholder tea subsector

• In March 2021, an Executive Order No. 2 was issued and with it directly affected and impacted on the affairs in the running of the small holder tea subsector,

• In the same month of March 2021, the Executive Order was challenged in the Constitutional Court and the Court stayed implementation of clauses of the Executive Order that called for elections and reorganization of the Small Holder Tea Factories and KTDA Holdings respectively.

• Notwithstanding the Court Orders staying the specific clauses of the Executive Order, the Ministry of Agriculture, the Tea Board of Kenya, the Registrar of Companies and players in respective Local Administration, interfered with the running of the affairs and governance structures of KTDA Holdings, its subsidiary companies, associated companies and the small holder tea factory companies.

• Governance records at the Business Registration Services (Registrar of Companies) were subsequently illegally interfered with and names of directors and officers unlawfully removed.

• Contempt of Court proceedings have been instituted against the individual persons that have brazenly ignored Court orders in their state capture interference of the small holder tea industry.

Business Interference and its effects

• The forceful direction to have all (100%) small holder produced teas sold at the tea auction as opposed to the 80% (Auction) and 20% (Direct Sales) that is the unbroken model that has best served the small holder industry, has adversely affected the sales of teas. Many direct sales international buyers have as a result been locked out of purchase of teas and have changed to buying teas from other countries.

• The forceful introduction of a base tea price on only the small holder tea factories at the auction in Mombasa has affected the said smallholder, with buyers shying away from purchasing their teas and procuring teas from multinational, independent factories and factories from Rwanda, Burundi, Uganda and other countries that sell their teas at the auction. These factories did not have a base rate enforced on them.

• The forceful direction to have the smallholder teas and fertilizer transported by SGR to Mombasa as opposed to the cheap traditional transportation by truck has increasedand will increase the costs to the farmer, due to the tariffs and multiple interventions, breaks and handling the commodity goes through.

• The issue of auction sales and base rate has caused the small holder tea stocks and the Mombasa warehouses to swell to levels unknown since the 2007 PEV troubles. The Warehouses have stocks in some factories up to 65-70%, meaning the teas remaining unsold.

CAPTION: CAPTION: Former Agriculture Cabinet Secretary Peter Munya

• The issue of forceful minimum base rate at the auction has caused a number of teas being reprinted upto 15 times, this meaning that some teas have remained unsold for a period of more than a year (an outlot is reprinted for the auction every 3 weeks, and a fresh tea tea takes 45 – 60days to be offered for sale in the auction in the normal tea sales cycle). A single reprint means the factory suffers loss of revenue as those teas remained unsold.

• A hitherto unknown Tea Broker was registered by the Tea Board and EATTA in record time (during these troubled times).

• Through state capture, the Tea Broker has since irregularlytaken over tea gardens (factories) from other existing tea brokers and has since taken over 21 gardens (factories) from other brokers and the number is growing.

Governance interference at the Small Holder Tea Sector & Company Titles and Records

• The interference by introduction and imposition of leadership of directors on the factory companies against the company articles of association and against court orders has adversely affected the governance structures and with it unwarranted and unaccounted expenditures by the imposed leaders and their imprudent decisions.

• The directors of the factories have proceeded to High Courts in Nairobi, Kiambu, Muranga, Nyeri, Meru, Embu, Kirinyaga, Bomet, Kericho, Kakamega, Kitale, Kisii&Nyamira directly challenging the manner in which the imposed leaders entered office. High Court Embu has issued orders barring the imposed Kirinyaga leaders from holding themselves out as directors,pending the determination of the matter.However, through state capture they have defied the court orders.

• Through state capture interference, in April 2021, KTDA Group Company records, including 920 Title deeds (including Factory Company and Buying Center title deeds), Company minutes, contracts, ICT Servers and other key records, were illegally impounded by a Multi-agency team. The whereabouts and safety of the records remain unknown, at the risk of the loss of these properties.

Default in repayment of external loans & Delays in completion of Small Hydro Power Projects (SHP’s)

It is good to note that the likely cause of poor financial performance of KTPC and the RPCs on which it relies as the primary source of revenue include but not limited to;

• The long learning curve by those appointed to act because there was no proper structured handover process.

• Restarting of loan application process for those that were at the tail end.

And as a result of the above points, the following consequences have taken effect:

• Project implementation delays.

• Extended contract periods.

• Additional claims from contractors on contract time extensions.

• Borrowing to service loans which were to be paid by revenue from the completed projects.

• Cost escalation arising from the construction materials during the extended project timelines.

• Inadequate revenue for KTPC to cover expenses.

• Lapse of permits and licenses due to failure to meet timelines as granted.

• The interference in the small holder sector has led to the default in payment of loan commitments that had been extended by both internal and external financial institutions. This leading to increase in high interest repayments and exposure of the smallholder.

• The interference has led to the delay in completion of the SHP’s and has set in heavy penalties demands by contractors and consultants, all eventually to be paid by the stallholder farmer, the owners of the SHP’s.

Forceful eviction of Senior management

• With this state capture, the imposed KTDA leadership has within the last 12 months forcefully planned the eviction and illegal removal from employment of senior management employees of KTDA Holdings, its subsidiaries and factory companies.

• A number of these employees have since proceeded to the Employment and Labour Relations Court (ELRC), where various orders and directions have been issued, protecting their employment rights.

• These illegal acts were/are intended to stifle any decent or opposition to the wrongful acts being perpetrated against the small holder tea sub-sector and the industry at large.

• Secondment of armed police officers at KTDA headquarters and deployment of personal armed police guard to the imposed CEO and Chairman on 24hrs at the cost of shareholders.

Use of State Organs to Harass Directors and Senior Management

• In the last 18 months State Organs and machinery have been used as weapons against the legitimate directors of KTDA Holdings, Factory Companies and Senior Management and these have been seen as acts of intimidation.

• These acts of intimidation and harassment have been with an intention to stop the company officers (directors and management) to drop any opposition and challenge to the state interference of the tea sector.

• Arbitrarily transfer of employees from their respective work stations for fear of resistance to change by the illegitimate directors.

• Arbitrarily and unlawful eviction of Factory Unit Managers and their families from their residential houses in the presence of armed police officers during the forceful takeover of the illegitimate directors.

SPECIFICS HIGHLIGHTING ABOVE

1. On 21st June 2021, 12 individuals calling themselves the new Board accompanied by armed policemen took over the KTDA Holdings and subsidiaries. This was not withstanding an existing court order barring conduct of elections.

2. After the takeover, they sent all senior management first on compulsory leave and later were discharged either through termination or early retirement. Others were put on extended leave up to now on full pay but without any duties.

The consequence of this was that the organization lost the most experienced and committed staff who have managed it to high performance levels. In addition, the action triggered court action by aggrieved staff and also unnecessary loss of funds as payment to the staff who had to be paid to retire and those who continue to be paid without working.

3. Stopped tea sales through Direct Sales and directed all teas be sold through the auction.

The consequence of this is loss of direct sale customers, and increase in stocks of tea such that whereas the crop declined by 1% compared to the previous year, the tea stocks rose from 36.9 million kilos worth about Ksh 8.8 billion at the end of the previous year (June 2021) to 68.6 million kgs worth about Ksh 21.4 billion at the end of June 2022.

This is the reason the organization had to borrow money to finance the second payment to farmers that was paid in July (earlier than the usual October payments). The farmers are thus saddled with unnecessary loan interest payments for servicing the loan.

In addition, tea losses quality with age and the old stocks will be hard to sell.

4. Set a minimum price of $2.43 per kilo of tea.

This is seemingly an attempt to improve tea prices and hence income to farmers but it has had the following consequences;

• Some teas do not attract buyers due to the artificial high price raising the quantity of unsold stocks.

• Increase in the quantity of reprints in the auction. When a tea fails to sell in a particular auction, it is withdrawn to be offered for sale again (reprinted) three weeks after. For every sale, a 4 kg sample has to be drawn from the tea for distribution to the buyers. This leads to loss of revenue for the farmers. Some teas have been reprinted 15 times!

• Loss of revenue. These unsold teas incurred costs during processing and failure to sell them weakens the cash flow position of the factories making them unable to meet obligations when they fall due, such as the green leaf payments reported above. The factories are also experiencing inordinate delays in receiving funds for their operations thus affecting service delivery.

• Other producers who have not set any floor price havebenefitted from the KTDA teas floor price since buyers are opting to buy their teas, e.g. Camelia PLC cited this in their 2021 annual report.

• Whereas prices improved apparently by 27% in the year, the actual change would be realized once the huge stocks are sold. In addition, tea prices have improved across the world.

• Economist have argued against setting a floor price for a freely traded commodity saying if the cause of the low price is oversupply of the product, a minimum price encourages more production due to better pay and therefore makes the supply situation worse and consequently, an even lower price will ensue, unless the government has alternative ways of disposing the surplus product. It is quite telling that none of the other producers here and across the other auction centers in the world have put a floor price in place.

5. Directed that all teas be transported through the SGR.

An earlier pilot had shown that the factories would end up paying more for transporting tea via SGR, the logistical difficulties notwithstanding. This is what was realized when it was decreed that all teas be transported via SGR and it was eventually abandoned.

6. Had the fertilizer transported through the SGR and awarded the contract for support services to a third party.

These support services have traditionally been performed internally by Chai Trading subsidiary at lower cost than market cost. The farmers hence unnecessarily paid more for the same service eroding their incomes.

7. Tendered for the supply of 400,000 bags of fertilizer in August 2021 and accepted delivery of a different specification (steam granulated using urea) fertilizer when the legacy specification excluded ureic and cyanamide nitrogen for technical reasons.

Ureic nitrogen has high soil mobility and is more prone to be lost on application in certain soil conditions, hence a loss of plant nutrition and crop.

8. Tendered and awarded supply of 88,000 metric tons of fertilizer in January, again allowing supply of fertilizer with legacy specification as well as steam granulated using urea as a source of nitrogen. The tender was awarded to an internationally sourcing supplier and a local supplier. The international supply award was later withdrawn forcing a retender. This had been awarded to the lowest bidder at $628 per metric ton.

The repeat tender was again awarded to the same supplier who had withdrawn their bid. This is unprocedural in procurement practice to allow a bidder who has failed to honor an award, to not only participate in a repeat tender, but be awarded the repeat tender at a higher price. This was awarded at $807.40 per metric ton to the same bidder who had failed to supply at $ 628 per metric ton.

9. High costs at the factories especially board allowances, as board meetings have increased materially. Such costs have doubled and even tripled in some factories. Many are unscheduled and/or called haphazardly with the main aim being to earn allowances. There are also frequent benchmarking trips whose benefits cannot be demonstrated.

These meetings would hitherto be scheduled and agenda known. With the outsourcing of secretarial services and the scrapping of the Regional Manager position, there is no control and many of the boards are unable to exercise self regulation. There isalso unprocerudural procurement of services and goods at the factories due to conflict of interest.

10. Construction at the hydro stations has stalled. This is likely to cost farmers more as the contractors will demand compensation for the lost period. Already about Ksh 3 billion claims have been submitted for contractual breaches. These will continue rising until the matter is resolved. In addition, the power subsidiary KTPC, a hitherto profitable subsidiary is now posting losses. It has been reported that there’s intention to dilute the farmers’ interest in the company through inviting an external shareholder. This is contrary to the original objectives of setting up the subsidiary to invest in renewable energy for use by the factories to lower their cost of production and carbon footprint, as an investor is expected to maximize returns from their investment, hence charging factories at commercial rates for power supply.

11. The group continues to lose crop to independent producers who pay much less that its managed factories. The subsector has in the past processed about 60% of the national tea production. This has now dropped from 54.21% in 2020/2021 to 53.73% in 2021/22. This is a result of licensing of more independent factories as well as being symptomatic of the reduced confidence in the running of the institution by the tea farmers.

12. Select members of senior management and the board were put under targeted tax investigations and unprocedural restricting of bank accounts by the KRA in what can be said to be harassment for unknown reasons.

13. Audits and investigations have been carried out in the factories, KTDA and subsidiaries ostensibly to unearth wrong doings and as a basis to institute criminal charges against the management and the Board. Despite the very public pronouncements of the intention of these undertakings, apparently and as expected, no evidence of deliberate wrongdoing has been found across the group.

THE FOLLOWING ARE THE COURT CASES AND CURRENT STATUS.

1. NAIROBI JUDICIAL REVIEW APPLICATION NO. E014 OF 2020 – National Steering Committee on the Implementation of Tea Reforms in Kenya

• A Committee was set up By CS Munya to force through the impugned Tea Reforms on 9th July 2020.

• The formation and set up of the Committee was challenged by KTDA in the Judicial Review division of the High Court.

• The High Court (Judicial Review) found the Committee and process had breached legal due process and mandate. The Committee was termed illegal.

2. NAIROBI H.C CONSTITUTIONAL PETITION NO. E254 OF 2020. (CONSOLIDATED WITH Petition No. 253 of 2020. KTDA (HOLDINGS) LTD & KTDA (MS) LTD

• The office of DCI was weaponized and with it without a formal complaint submitted to it or any Police Station, initiated an investigation against KTDA and its officers, after issuance of sensational statements in the newspapers.

• KTDA challenged the process and the Constitutional Court on 7th September 2020, issued stay orders against the office of the DCI, IG, and AG.

• The matter was merged with other constitutional matters (see below). Attempts by Munya appointed directors to interfere with the case, have new lawyers take over and withdraw the same have been repulsed and not been successful. The Court Orders remain in force.

3. NAIROBI H.C CONSTITUTIONAL & HR DIVISION PETITION NO. E0243 OF 2020. KTDA H & KTDA MS VS. CS. AGRICULTURE, LIVESTOCK, FISHERIES & COOPERATIVES, THE AGRICULTURE & FOOD AUTHORITY, THE HON. AG – Tea RegulationsConsolidated with MOMBASA CONSTITUTIONAL PETITION NO. 87 OF 2020 – EATTAvs. THE CS. AGRICULTURE, LIVESTOCK AND FISHERIES & COOPERATIVES &OTHERS.

• These are a combination of Constitutional Case matters of Mombasa and Nairobi and were consolidated.

• In August 2020 CS Munya interfered with the electoral process of the KTDA run Factories and sought the Nairobi High Courts intervention in stopping the factory elections. The High Court threw out CS Munya’s application and ruled that elections should proceed.

• Having lost the Nairobi Case, CS Munya and AG moved to Mombasa High Court and without informing the Mombasa Court that there existed a ruling in Nairobi, sought and got Orders stopping the Factory Company elections.

• CS Munya additionally and unilaterally issued an elections timetable for Factory directors in August citing tea regulations that had themselves been stayed by the Courts and ignoring his own acquired court orders stopping the elections.

• In March 2021, H.E. President Kenyatta issued Executive Order No. 2 of 2021 and in it he directed:

i. Reorganization of KTDA Holdings PLC and its Subsidiaries,

ii. Elections of KTDA managed Tea Factory Directors within 60 days and supervised by Tea Board of Kenya.

• The Constitutional Court High Court in an application to it stayed the Executive Order No. 2 that touched on the above two items. The Orders remain in force.

• Notwithstanding the above orders, CS Munya, Tea Board of Kenya and CS Interior interfered and together forced a process that brought in other people as directors of the companies.

• The Office of Registrar of Companies (BRS) illegally altered the records of companies where he is the custodian of company records.

• Contempt of Court proceedings against the CS Agriculture, CS Interior, the Registrar of Companies and all those that were involved in the sham and illegal factory electoral process.

• The Court Orders that stopped elections remain in force, notwithstanding the fact that the CS Munya installed directors have had their appointed lawyers proceed to the Court of Appeal.

4. HIGH COURT OF KENYA CHALLENGES IN MERU, EMBU, NYERI, MURANGA, KIAMBU, BOMET, KERICHO, KISII, NYAMIRA KITALE AND KAKAMENGA

• The illegally removed directors have filed cases challenging the CS Munya directors in the following Courts:

i. Meru High Court,

ii. Embu High Court,

iii. Nyeri High Court,

iv. Muranga High Court,

v. Kiambu High Court

vi. Bomet High Court,

vii. Kericho High Court,

viii. Kisii High Court,

ix. Nyamira High Court,

x. Kitale High Court &

xi. Kakamega High Court.

• The High Court in Embu issued interim Orders barring the CS Munya directors of the Kirinyaga Factories, from holding themselves out as directors.The orders were defied.

• The matters await determination.

PREVIOUS BUT ONGOING CASES AFFECTING THE GROUP

1.NYERI JUDICIAL REVIEW NO. 5 OF 2017 – GEOFFREY CHEGE KIRUNDI vs. DISPUTE RESOLUTION BOARD OF KTDA AND KTDA HOLDINGS

• Mr. Kirundi was condemned to pay costs which have been assessed at Kshs.

2, 183,505/=. Efforts to recover the costs are underway.

2. APPEAL AND APPLICATIONS BEFORE THE COURT OF APPEALNYERI/NAIROBI

• Mr. Kirundi, in the name of Kiru TFC filed at Nyeri Court of Appeal Civil Application No 132 of 2017 being an application for injunction pending appeal from the ruling from Nyeri Judicial Review No. 5 Of 2017 – Geoffrey Chege Kirundi Vs. Dispute Resolution Board Of KTDA And KTDA Holdings.

• Mr. Kirundi,in the name of Kiru TFC filed further filed in Nyeri Court of Appeal Civil Application No 133 of 2017being an application seeking stay pending appeal from the ruling from Nyeri Judicial Review No. 18 Of 2017. The Court granted an order of Injunction restraining KTDA H Ltd from confirming the nomination of Zone 3 representative.

• These proceedings in the Nyeri Court of Appeal were stayed pending determination of the matters before the Supreme Court (See below)

3. NYERI COURT OF APPEAL CIVIL APPLICATION NO.137 OF 2017(UR 100/17) KIRU TEA FACTORY LTD –VS- STEPHEN GITHIGA, ESTON GAKUNGU, PETER KINYUA, FRANCIS MARK, LERIONKA TIAMPTATI, PETER KANYAGO, PHILIP NGETICH, JOSEPH WAKIMANI, ERASTUS GAKUYA, BENSON NGARI, ALFRED NJAGI, ARTHUR RIMBERIA J. KIPNGETICH & JFK.OMANGA

• Mr. Geoffrey Chege Kirundi under the guise of Kiru Tea factory filed another application before the Court of Appeal on 13.12.2017 seeking to cite the respondentsfor contempt of court of Appeal orders issued on 6.12.2017 in Nyeri Civil Applications No. 132 & 133 of 2017 (cited above). Civil Applications No. 132 & 133 of 2017 were consolidated into Civil Application No. 137 of 2017.

4. NAIROBI SUPREME COURT CIVIL APPLICATION NO. 12 OF 2019 – STEPHEN MAINA GITHIGA & 5 OTHERS VS. KIRU TEA FACTORY LIMITED (RULES OF NATURAL JUSTICE)

• Following the order for contempt, the six (6) contemnors filed an application before the Supreme Court on the grounds that they had been condemned on an application which did not exist as the same had been amended and further that they were condemned unheard as against the provisions in the Constitution on fair hearing and the rules of natural justice.

• Stay of orders of the Court of Appeal granted.

5. NAIROBI SUPREME COURT CIVIL APPLICATION NO. 3 OF 2019 – KIRU TEA FACTORY LIMITED VS. STEPHEN MAINA GITHIGA & 5 OTHERS (LEGAL REPRESENTATION)

• The Board of Kiru TF, being aggrieved from the ruling dated 22nd February 2019 on legal representation, filed an application dated 7th March 2019 for grant of leave from the Court of Appeal to the Supreme Court.

• Stay of orders of the Court of Appeal granted. Matter fixed for mention for further directions on 4th May, 2021. Matters await directions of the Supreme Court.

9. MURANG’A HIGH COURT PETITION NO. 36 OF 2019 – MURANG’A COUNTY GOVERNMENT VS. KTDA (HOLDINGS) LIMITED

Murang’a County Government filed a suit against KTDA-H on 7th October 2019 primarily seeking the following orders:

● That the Auditor General considers carrying out an independent audit of the audit of KTDA relating to tea earnings or bonuses for the year 2019 tea earnings or bonuses for the tea farmers in Murang’a County for the produce supplied to KTDA;

● That a copy of the report of such audit be filed in court as soon as practicable.

On 7th October 2019, Justice Kanyi Kimondo directed the Auditor General to consider auditing the bonuses paid to farmers.

The following applications have been filed:

a) An application seeking to discharge the order granted by Justice Kanyi Kimondo directing that the Auditor General may consider auditing KTDA accounts. This is premised on the fact that Article 229(5) of the Constitution provides that ‘The Auditor-General may audit and report on the accounts of any entity that is funded from public funds. KTDA does not receive public funds.

b) An application seeking to enjoin all the tea factories to be enjoined in the case as it is of interest to the factories and would want to be heard. This application also seeks to have the County Government of Murang’a ordered to deposit the expenses that would be incurred in the audit exercise.

c) An application for orders that the petition is consolidated with the Kericho Governor petition since both petitions raise similar issues. Further, that the case is heard by a three judge bench or more since it raises substantial questions of law.

This case came up for hearing on 28th October 2019 and the court placed aside the pending applications save for the application for consolidation filed by KTDA. Matter ongoing.

10.NAIROBI H.C CONSTITUTIONAL PETITION NO. 442 OF 2019. JOSEPH MWANGI MBOTE, PETERSON MAINA GATHUA & SAMSON MWANGI WAIRUGU VS. KTDA (HOLDINGS) LTD & KTDA MANAGEMENT SERVICES

The Plaintiff’s – Joseph Mwangi Mbote, Peterson Maina Gathua and Samson Mwangi Wairugu filed a petition dated 4th November, 2019. The Plaintiffs are tea growers and shareholders of Makomboki, Njunu and Kiru Tea Factories respectively who allege that their constitutional rights since the elections were allegedly not conducted in accordance with the Companies Act and the respective Articles of Association.

They sought the following substantive orders from the court:

● A declaration that the election of Tea Factory Company director’s nominees and Buying Centre Committee Members – Procedures November 2019 are illegal, null and void;

● A declaration that the zonal elections held in October, 2019 were illegal, null and void.

Matter heard and dismissed.

11. NAIROBIHCCC 45 OF 2020 – KTDA vs. NATION MEDIA GROUP & 5 OTHERS

• Nation Media Group and their reporters have published various Articles between 8th& 13th October 2019 that are wrong, misleading, and defamatory and damaging to KTDA. The words used in the articles portray KTDA as unscrupulous, manipulative and dishonest in discharging its duties. Advocates have been instructed to file defamatory suit against Nation Media Group.

The Defendants filed an application to have the suit struck out on two main grounds;

1. That KTDA is a public company.

2. That a public company cannot maintain an action in defamation.

The court directed that the application be dispensed by way of written submissions. Mention to confirm filing of submissions and for further directions on 20th April 2021.

12. NAIROBI ELRC CASE NO. E027 OF 2020. Dr. JOHN KENNEDY OMANGA VS. CS. AGRICULTURE, LIVESTOCK, FISHERIS &COOPERATIVES, THE AGRICULTURE & FOOD AUTHORITY, THE HON. AG, (KTDA MS & KTDA HOLDINGS) as 1ST& 2NDINTERESTED PARTIES.

PETITION BY KTDA STAFF AGAINST TEA REGULATIONS 2020

• The Cabinet Secretary – Ministry of Agriculture, Livestock, Fisheries& Cooperatives issued a press release on 3rdAugust 2020 announcing the implementation Schedule and corresponding timelines for compliance by tea sector players in respect of the Tea Regulations.

• The ELRC granted interim orders and the prosecution of the suit awaits Court directions.

13. EMBU H.C CONSTITUTIONAL PETITION NO. 002 OF 2021 – MUNGANIA TEA FACTORY COMPANY LTD VS THE A.G

• This is a class action Constitutional Petition filed to challenge and seek redress on the offensive clauses of the Tea Act which came into effect on 11th January, 2021 and any regulations made thereunder. Initially Mungania Tea Factory filed the petition and later on the sister Tea Factory Companies sought to be enjoined as co-petitioners in the case. An application was filed under certificate of urgency seeking that all the sister Tea Factory Companies be enjoined in the case as co-petitioners since their complaints and that of the lead company, Mungania T.F.C, are similar in both form and content. The Court considered the application for enjoinder and found it to be of merit and allowed the same. The sister Tea Factory Companies have therefore been enjoined as co-petitioners.

• An order staying/suspending the implementation of some sections of the Act was granted by the High Court on 18th January 2021. The suspended sections are 5(1)(e) & (l), 21(2), 22, 25, 33, 34, 36, 37(3), 39, 40, 41, 42, 45 and 74.The Orders remain in force.

• This matter was consolidated with the other Constitutional matters and await direction of the Constitutional Court, which awaits directions of the Court of Appeal.

14. NAIROBI HC CONSTITUTIONAL & HUMAN RIGHTS DIVISION PETITION NO. E083 OF 2021 – KTDA H vs. C.S AGRICULTURE, C.S INTERIOR AND A.G – Executive Order

• On 12th March 2021, H.E The President issued Executive Order No. 3 of 2021 addressing issues relating to the KTDA Group. The Executive Order also touched on court cases currently in court and the Tea Act 2020 whereupon certain directions were issued.

• The Executive Order attempts to take over the ownership, management and control of the small holder tea industry and to introduce third party bodies in the business, governance and management of statutory company events. The Executive Order is in violation of the Constitution of Kenya, various laws and is in violation of existing court orders.

• A petition and an application seeking interim conservatory orders were filed challenging the validity of the Executive Order. The application by KTDA seeking conservatory orders was certified urgent and placed before Justice Mrima on 24th March 2021 where the court granted conservatory orders staying/suspending parts of the Executive Order touching on attempts to re-align KTDA and its subsidiaries and the role of Tea Board in the oversight of the factory elections planned to take place within 60 days from 12th March 2021, the date of the Executive Order.

• This matter was merged with other Constitutional Cases (above) and awaits directions of the Constitutional Court. The interim Orders subsist.

• Notwithstanding the orders CS Munya, CS Interior, Tea Board of Kenya and other State Organs have continued to protect their installed directors in office.

SUMMARY.

The directors that were illegally installed continue to interfere with the business and functions of the KTDA Group. There is wanton impunity and ignoring of Court Orders.

This war against KTDA has been characterized by various factors;

1. Politics

2. Personal interests

3. Business interests

4. Propaganda

5. A narrative based on KTDA stand on the new Tea Act/Regulation with individuals propagating the notion that KTDA is opposed to the Act, yet all KTDA has been calling for is a discussion on the contentious clauses for the sake of the business and industry.

It would be prudent if the desired change is driven devoid of the above for the sake of well– being of the common good of the native farmer and all the stakeholders. And that the progression of the elections are stopped until all the matters in court are dispensed off with for the interest of justice to all the concerned parties.

ADDITIONAL HISTORICAL FACTS WHICH WERE SHARED FOR CONSIDERATION BEFORE THE ONSLAUGHT OF THE WAR AGAINST KTDA

Sometimes in the year 2017 Kiru Tea Factory company limited (one among the 54 KTDA managed tea factories) conducted elections of the directors where Geoffrey Chege Kirundi (who had served in the factory as a director/chairman and who is a counsel by profession) was thrown out in the elections and from that time become discontented and vowed to start an onslaught against some of the elected directors (Stephen Githiga-The Director who replaced him as a Chairman and still the current chairman of the board ) , the board member (Mark Macharia- who replaced him as a Zonal board member and is the current board member), the KTDA board overall board Chairman (Peter Kanyago-who had defeated him in the top board elections for the seat of the chairman ), KTDA company secretary (Mr. Kennedy Omanga) and the KTDA CEO (Mr. LerionkaTiampati) all of whom G.C Kirundi felt had contributed to his removal. Besides, he also lost his seat as factory director at Kiru to his brother Sammy Kirundi.

In his onslaught to revenge G.C Kirundi decided to remove the above named persons from their offices and he adopted various strategies which includes the following;

1. Appealing against the electrol process which worked against him.

2. Filing cases in courts which most of them were not in his favor and others are still pending in courts (as indicated below).

3. Causing discontent in the voters within his electoral area through propaganda and incitement against the current factory board.

4. Conducting parallel/ illegal elections in the factory where he was elected as chairman with his board.

5. Manipulation of records at the registrar of companies to replace the sitting directors.

6. Recruitment of a Company Secretary(BenardKiragu) for Kiru tea factory ltd and forgery of the company seal who is case was reported at CID headquarters and has never been investigated up to date. This was discovered after GC. Kirundi filled documents in civil case which bore the Kiru factory company seal while the seal is still held by KTDA company secretary(Mr. Omanga) as per the current management agreement.

7. Use of politics by dragging in both local and national politicians to manipulate them in his favor.

8. Use of his personal resources (proceeds of one of his prime parcels of land at Karen area in Nairobi which he disposed off and vowed to use to bring down KTDA) to spread malicious and false information against KTDA Board and management through social media (WhatsApp, Facebook, Twitter and blogs ) radio, TV stations, magazines- e.g. markets edition published by Byroernne medianet.com, gutter press e.g. citizen , leaflets- Bill’s Digest 2018 ([email protected] which was circulated in Murang’a county in the month of June 2018), newspapers e.g. the nation newspaper which did lots of negative serialization.

9. Fabrication of criminal cases against KTDA directors and employees e.g. a case reported to central police station in the year 2017 where the employees were arrested on tramped charges and another case reported against the directors at Buruburu police station on a purported case of robbery.

10. Arranging and convening illegal meetings at Kiru tea factory and disrupting factory operations and business.

11. Forceful takeover of Kiru Tea factory company e.g. on 1stJuly,2019 when the factory operations were temporarily paralyzed after a group of about 20 security guards from Tracksman security company limited invaded the factory for a forceful takeover of the provision of security services, thus dislodging the regular factory guards from Cobra Security company. The matter was reported to police at Kiriaini police station vide OB2/1/7/19 where the guards were arrested and arraigned in Kangema law courts vide CR NO. 23A/62/2019, CF. NO. 429/2019 offence- Creating disturbance and trespass. During the investigation it was established that the guards were under clear, written and strict instructions from Mr. Geoffrey Chege Kirundi whose arrest is still pending because of his influence both financially, litigiousnature and patronage. The current position of this matter is that the DPP withdrew the case against the guards and advised for the arrest of G.C.Kirundi (who is the principal offender and has never been arrested because of his intimidation and boastful manner as he is said to be operating with the state).

12. Recruitment of former directors who have been failures in elections and disgruntled staff (current and Ex-employees) to join him in his war against current KTDA Directors, management and staff.

13. Elimination of the people he thought and perceived contributed to his woes including his own brother-Sammy Kirundi who died under unclear circumstances and it was later rumored thathe was poisoned after taking food in a certain hotel at Kiriaini Market within Muranga County.

14. Recruitment of persons with national political interest to join him in the war and use this onslaught to advance their political interests for 2022 politics e.g. IrunguNyakera (who is aiming to be a Governor in Muranga), CS Munya (who is aiming to be bounce back as a Governor in Meru) and others.

15. Influencing the current Senate and National assembly to join in the war against KTDA while advancing their political interest in 2022.

16. Influencing persons with business interests to sabotage KTDA for them to be beneficiaries of the business run by KTDA and its subsidiaries e.g. warehousing, insurance, credit facilities to farmers, machinery, fertilizer and machinery supply.

17. Using the executive and some members in judiciary to make sure KTDA does not get justice in all matters affecting it as one of the largest shareholder in the Tea industrye.g During the process of gathering views (public participation) for the legislation of the now contentious Tea bill and Tea regulations CS Munya blatantly refused to meet with KTDA inspite of the various attempts by KTDA to meet him to give their input. The CS kept on saying KTDA wanted to bribe him.

18. Intimidating police officers to investigate and take action on cases reported against by KTDA even when there is clear and straightforward evidence e.g the various cases pending in Kiriain police station and the others at CID headquarters.

19. Using of unorthodox means to bounce back to KTDA as a factory director at Kiru tea factory, Board member of Zone three (3) and Chairman of KTDA top board e.g this way constituted an illegal/parallel board of Kiru tea factory company which is he endorsed on 16.04.2021(during the ongoing sham elections) with he himself as the factory chairman. And during this exercise he strategically used police officers and his hired security guards to lock out the majority of the shareholders whom he believes are opposed to him and are supporters of the current factory directors.

20. Use of personal vendetta to bring down the entire organization (KTDA) for the benefit of himself and others who are said to have formed parallel managing agencies and private tea factories.

21. Well-coordinated and planned blanket condemnation of KTDA board, its management and staff through a creation of a cartel narrative.

22. Initiating a wave of revolution against KTDA starting with Muranga tea factories.

Sometimes in the month of November 2020 as usual KTDA as required by law planned and arranged for its annual elections of directors. The elections started at the buying centers (as per the company’s regulations on elections) and before they progressed to the next level of directors elections the CS for Agriculture went to court and sought orders to stop elections (based on the Tea Act and regulations which were still pending to be legislated and his intentions to make sure that KTDA elections are conducted within the legislation). And also wrote a letter addressed to 69 Factory Unit Managers to cooperate with him in as far as the intended tea reforms (which were still in the pipelines) are concerned. The court granted him the order stopping the elections and KTDA complied with order by stopping the elections up to date waiting for determination of the case which is still pending.

While the case was ongoing in courts, the head of state issued a presidential directive for the elections to be conducted within 60 days under the new Tea Act/regulations while supervised by Tea Board (which is yet been constituted),

However this directive was given a stay order by High court after KTDA returned to court and challenged the directive.

Thereafter, the CS Agriculture and the CS internal security gave instructions for the elections to be conducted through the County administration and security agencies. This elections started in Muranga County where the elections were conducted in the following factories Kanyenyaini, Githambo, Nduti, Gacharage, Makomboki, Njunu, Ngere and later followed by Kiambu and Nyeri factories and later to Kirinyaga and Embu factories.

It’s interesting to note that two growers were used to call for these elections in each factory and the elections were conducted in public grounds or schools safe for Kiru and Gatunguru where the elections were held at the factory grounds. While the elections were in progress KTDA moved to court and obtained another court order to stop the elections however the elections have continued to be conducted and expected to done in the remaining areas which includes Meru, Kericho, Kisii, Bomet and Nandi.

After this elections the following has been observed;

1. A handful of growers have participated in the elections as opposed to the proper involvement of the growers in the factories and this has resulted to rejection of the process and the outcome (purported directors).

2. Attempted forceful takeovers of factories by the purported directors e.g. Nduti, Njunu, Makomboki, Kanyenyaini, Githambo, Kiru and Ndima.

3. Manipulation of records at the registrar of companies for the factories so as to dislodge the bonafide directors e.g. Kanyenyaini, Githambo, Njunu, Makomboki, Ikumbi and Nduti.

4. Disruption of factory operations e.g. Githambo where the purported board broke into the boardroom replaced the lock, carried the keys and have been operating in that boardroom since then and they are not an executive board. And have issued termination letters to the security service providers and written to the banks for change account signatories. In Kiru factory during the elections on 16/04/2021 the purported board brought in hired security guards to dislodge the current factory guards from the factory. In Ndima tea factory the purported board broke into the boardroom, took away the portraits of the current board and defaced the identity markings on the doors of the management staff.

5. Intimidation of the Factory unit managers through county administration and police e.g. in Kanyenyaini tea factory they summoned the factory manager to their offices and instructed her to work with the purported board if they want to be secure. In Nduti tea factory the purported board wrote a letter to the factory unit manager intimidating her to work with them or be dismissed.

6. Continued breach of the Covid -19 protocols with due care and concern by the enforcement agencies.

7. Baseless condemnation of KTDA.

8. Election and imposition of characters as directors with known vested interests and adverse reports.

9. Forgery of documents to just the process e.g forgery of IEBC stamp to imply that the elections were conducted by IEBC.

10. Defrauding of candidates during the elections e.g people who purported to be the officials of these elections collected monies from the potential candidates which they converted into their own use.

11. Poor farmers participation in the elections which raises legitimacy concerns on purported directors.

12. Creation of two parallel board of directors which causes a lot confusion and chaos at the factories.

On 16/04/2021 at around 2.00 P.M KTDA offices and its subsidiary Chai Trading co. ltd in Mombasa and East African Tea Traders Association (EATA) were raided by armed security officers with a court order issued by a magistrate court while the matter is still pending in the High court.

This process is still ongoing and the officers are still in the offices and have paralyzed the operations of the company e.g. Dispatch of teas to Mombasa, Business transactions because the systems have been tampered with.

The possible repercussions of these events/activities are as follows;

1. Stoppage of tea plucking

2. Stoppage of tea processing

3. Prolonged Withholding of already manufactured teas at the factories.

4. Chaos and demonstrations by growers

5. Non payment of farmers.

6. Breakdown of Law and order and possible destruction of property and loss

of lives.

7. Mismanagement of the factories as they will be run by people with known vested interests and with known adverse records which cannot allow them to be directors.

8. Loss of market for the Kenya tea in the international market due to continued reputational damage.

9. Loss of foreign exchange.

10. Loss of tax by KRA.

11. Depressed tea prices at the tea auction.

12. Uprooting of tea bushes by the growers.

13. Non payment of suppliers and ultimate stoppage of supply of goods and services.

14. Poor credit rating and stoppage of credit facilities by the creditors.

15. Loss of jobs

16. Closure of the factories and eventual auctioning of the facilities/properties.

17. Loss of hope and trust in the government.

18. Economic sabotage

19. Anarchy in the Tea industry.