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Kenyans to pay Sh6bn in meat factory scandal

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By BRIAN WASUNA
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One of Kenya’s forgotten scandals, the 45-year-old Halal abattoir in Ngong, has resurfaced, and the taxpayer will, once again, shoulder the Sh5.7 billion burden of the private meat venture that went terribly wrong in the 1970s.

It has emerged from court proceedings that the National Treasury could be planning to pay out the cash for the botched project that has become a case study of all that could possibly go wrong with public-private partnerships.

In this case, the government provided land for the project and a loan towards its development, but has now been slapped with the massive bill.

At the High Court in Nairobi, tycoon Mohammed Ali Motha is fighting Mr Ramadhan Juma Ali, a man claiming to be his son, and who insists on getting a slice of the anticipated Sh5.7 billion payout from the government.

The pair has every reason to be confident about the payout after Livestock Principal Secretary Harry Kimtai told a court in December last year that the payment had been approved.

Halal Meat Products had asked the High Court to jail Mr Kimtai, arguing that he had stalled the release of their award. Replying, Mr Kimtai blamed the Treasury for delaying release of the funds, saying, the Agriculture and Livestock ministry had already approved the release of the funds to Halal.

It is a story of twists and turns, exposing government lethargy, bureaucracy, ineptitude and high-handedness.

The saga is traceable back to the meat shortage of 1972 in Nairobi, when the Agriculture ministry allowed the construction of privately-owned slaughterhouses in several towns across the country to compete with the Kenya Meat Commission. Within no time, there was an influx of meat, which raised new concerns over its fitness for consumption.

To address the concerns, the Agriculture ministry ordered that any vehicle transporting meat products should have a red stripe, with the word “meat” in white, a rule that stands to-date.

City Hall had also floated the idea of having a meat inspection facility on the city’s outskirts. The idea was to have all meat products destined to Nairobi inspected at the facility before being released into the market.

Automatically, Ngong was floated as a suitable location. After all, most meat coming into Nairobi at the time was from the nearby Ongata Rongai and Waithaka village.

That is how meat tycoon Mohammed Ali Motha and his business partner Abdul Habib Adam came into the picture. Mr Adam owned the Adam’s Arcade shopping centre on Nairobi’s Ngong Road, which he had founded in 1954, to serve the white community. Mr Motha was running a butchery there.

Thus, in 1973, Mr Motha and Mr Adam approached the government for assistance in getting a loan from the East African Development Bank, saying, he had some land in Ngong on which he wanted to put up a slaughterhouse.

The abattoir, he argued, would double up as an inspection unit, hence solve the City Hall’s puzzle and ensure Nairobi residents ate certified meat, akin to the standards applicable at the Kenya Meat Commission (KMC).

Word went around that Mr Motha intended to buy 60 acres of land in Ngong to expand his business empire. This irked the El-Kejuado County Council where Ngong town fell, and it blocked the businessman’s plan for a slaughterhouse and inspection unit.

But in 1974, Mr Jeremiah Nyagah, the then Agriculture minister, gave the two entrepreneurs the green light to set up an abattoir and inspection unit at a cost of Sh9.6 million. 

By then, the ministry had £500,000, which the Danish International Development Agency (Danida) had given for a project, but which had failed to materialise. This money was redirected to the abattoir project — as a government-guaranteed loan. Parliament was later told that this was a scandal.

In a series of mistakes that would haunt the government later on, the two businessmen were allowed to use their Halal Meat Products Ltd as the vehicle for the project, with the government having no shareholding in it.

The company had been incorporated on December 20, 1972 with Mr Adam, Mr Motha and his wife Fatuma Tunny Motha as its directors.

Mr Motha had expressed interest in meat export especially to the Middle East and part of his strategy was to use the name “Halal” to attract the unique, predominantly Islamic market.

But on March 4, 1974, Mr Adam died at the Nairobi Hospital. Mr Motha’s wife, Fatuma, bought his stake in Halal Meat Products and the project preparations proceeded.

Land was now the only challenge, but the ministry agreed to help the company acquire some in Ngong.

But a standoff ensued in August 1974 when Commissioner of Lands James O’Loughlin asked the Department of Veterinary Sciences to surrender 20 acres for the project.

Veterinary Sciences argued that some of the diseases it was studying could cross over to the abattoir and affect cattle before they were slaughtered. After the department refused to surrender land. Mr O’Loughlin threatened to initiate government sanctions against it.

Veterinary Sciences then proposed to surrender six acres. This was not enough, and Mr O’Loughlin demanded that the acreage be doubled. The Commissioner of Lands wanted more land so that a buffer zone could be created to reduce the risk of infection of the animals. Eventually Veterinary Services agreed to give 10 acres. It later gave another 1.5 acres to allow sewerage construction.

Within two weeks, a title deed had been processed for Mr Motha and Mr Adam. This was curious considering the laborious process usually took months.

The Agriculture ministry then released Sh27.701 million loan to Halal Meat Products Limited.

The company hit the ground running and hired Inter-Africa Construction Company to put up the abattoir.

Construction started towards the end of 1974 and took four years. Equipment worth Sh11.34 million was shipped into Kenya from Denmark, tax-free, on the assumption that it was the government importing and not a private company.

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After completion, Halal Meat Products marketing manager Wilfred Matheri claimed that the facility cost a total Sh50 million, and that government loaned it Sh27 million.

So, who owned Halal Meat Products abattoir?

In his 1977-1978 report, the Auditor General D.G. Njoroge questioned the government loan arrangement with Halal Meat Products as it appeared to be to the abattoir owners’ advantage. Interest on the loan, which was meant to be repaid from 1977, had not been remitted one year later.

The Auditor-General’s query sparked fireworks that would see even more questions raised on the abattoir project.

The abattoir was at this point complete and had the capacity to slaughter 1,200 animals per day. It also had three large chillers and three deep freezing rooms.

But the controversy surrounding it made it difficult to start operations in earnest. The Auditor-General painted a picture of a private company tricking the government into financing a project that would end up cannibalising KMC.

The Mothas refused to let KMC have a board member at Halal Meat Products, fuelling a war. More so because the Halal abattoir intended to export meat, which, at the time,was a role reserved for the KMC

Feeling the heat from the public outrage and Parliament, which was raising questions from the Auditor General’s report, Agriculture minister Jeremiah Nyagah opted to go to war with Mr Motha.

Mr Nyagah had just recovered from a maize scandal and the Halal project was threatening to sink him. Mr Nyagah demanded to know all Halal Meat Products stakeholders and how much the firm had injected into the abattoir.

In late 1978, the minister visited the abattoir with the Permanent Secretary S.D. Gathiuni and other officials. Some mid-level officials had visited the plant earlier incognito.

They found that the plant was operational and some Department of Veterinary Science employees were working there, too. It appeared that the government was now paying employees at a privately-owned abattoir, which was funded by taxpayers.


Several workers at the facility were former KMC employees. Mr Nyagah wondered why KMC staff had left pensionable government jobs for a private company, whose function and future was not yet defined. To the minister, this showed the hand of government officials working behind the scenes of the Halal abattoir.

The minister believed that former KMC managers were clandestinely using Halal Meat Products to hijack the multimillion meat export business.

In 1979, Mr Nyagah decided to deny Halal Meat Products an export licence.

Then former KMC boss Richard Douglas, who had a thriving butchery in Karen, expressed interest in joining the meat export industry. The former KMC commissioner had his eye on the state-of-the-art Ngong abattoir.

As Mr Nyagah planned to take over the facility and to second meat inspectors from Kajiado District to run it, he was moved from the Agriculture to the Environment ministry. The Halal project closed, too. After all it had no export licence.

It was in 1984 that Tourism minister Maina Wanjigi started to push for the reopening of the abattoir, but to process game meat and export it.

The KMC was at this time struggling to process meat as several animals were dying before being slaughtered. At KMC’s Athi River abattoir, nearly 40 animals would die from starvation each day. The cattle had been presented to KMC after several days of travel.

The Halal debate was reignited during the June 12, 1984 Kanu Parliamentary Group meeting, when President Daniel arap Moi issued a directive to Agriculture minister William Omamo to reopen the abattoir.

Mr Omamo complied, and the abattoir was reopened towards the end of August 1984 as a subsidiary of the KMC. That is the mistake the taxpayer is paying for.

The government expressed interest to buy out the Mothas from the abattoir, but a deal could not be reached. The Mothas sued government through Halal Meat Products in 1986, but even then an out-of-court settlement was still being pursued.

In June 1988, the government wrote to the Mothas, saying, it was no longer interested in buying the abattoir, and that it would hand them back the facility. By this time, the abattoir was not sustainable as many livestock farmers were also hoarding animals.

The Mothas decided to sue the government and demand compensation for lost profits. In response, the government denied owing the Mothas anything, and argued that the couple owed taxpayers Sh27 million — the loan that was yet to be repaid.

In 1989, High Court Judge Abdul Rauf ordered that the Mothas pay the Sh27 million they owed the taxpayers.

Attempts to settle out of court failed, as the parties could not agree on valuation of the abattoir. By 1996, government had not handed the facility back to Halal Meat Products and it was guarded by officers from the General Service Unit (GSU).

On October 7, 2005 High Court judge Jeanne Gacheche ruled that the government had done wrong by taking over the abattoir during the 1984 drought then refusing to buy it or restore it to its original state.

She awarded Halal Meat Products Sh1.8 billion, but ordered that the Sh27 million loan owed by the firm be deducted from the award.

Government’s 2016 challenge of the award flopped at the Appellate Court, which upheld Justice Gacheche’s order.

It has since been a cat-and-mouse game between the Mothas and government. Last December, they sought to have the Livestock PS jailed for allegedly stalling release of their award, which is now Sh5.7 billion due to an annual 12 per cent interest.



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General

Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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