Mwenda Njoka
11 August 2004
Nairobi — The scandal of how the illegal sale of part of Kenya's food reserves led to the current famine is exposed today.
So much maize was sold off cheaply for export two years ago that it led to the current crisis, a new report reveals.
And when the managing director of the national cereals board protested at the time that selling the maize could lead to famine, both he and his general manager were sacked.
Then, with a new management in place, more than half the maize - more than one million bags - was sold off cheaply to two firms associated with a former nominated MP, states the report by the Inspectorate of State Corporations. The sale so depleted Kenya's strategic food reserves that it led to the current famine, according to the report.
The maize was sold - "at uneconomical prices", notes the report - to Milly Grain Millers and Holbud (UK) Ltd., both firms associated with the former MP.
One of the firms, Holbud, was allocated maize even though it had not inquired about buying any and had not sent in a tender.
In the event, Milly Grain Millers and Holbud were allocated half of the two million bags earmarked for export by the National Cereals and Produce Board (NCPB), under orders from the Ministry of Agriculture.
Ordinarily, the cereals board reserves an average of two million bags every year as part of the national food strategic reserves and famine relief food.
Only when the maize harvest is exceedingly good and crop projections for the following season appear good does the government allow part of the strategic reserves to be exported.
In this particular case, the idea to export maize was initiated by the Ministry of Agriculture at the beginning of 2002 but the then managing director of the cereals board, Major (Rtd) Wilson Koitaba, resisted the sale, arguing that exporting the maize would lead to the board losing a lot of money and at the same time expose Kenya to the risk of a famine.
Soon after Major Koitaba wrote to the Agriculture permanent secretary, Mr Shem Migoti Adhola, resisting the ministry's efforts to sell off the maize, in February 2002, both he and his general manager in charge of finance and administration were removed.
Replacing them were Dr Julius Rotich as managing director MD and Mr Kiprono Kittony as general manager.
Then, as soon the new team was in place - on February 22, 2002 - the Agriculture PS sent a new directive that the board should sell its maize reserves, "at prevailing international market prices to offset part of NCPB's debt to farmers".
Around 65 firms sent offers to the board for buying the maize and on April 18, 2002, the tenders were opened.
Four firms - Abha Ltd, Milly Grain Millers, Holbud Ltd and Pisu & Co Ltd. - were allowed to buy a total of 213,000 metric tonnes of maize; about 2.3 million bags.
Although the inspectors' report questions the whole basis of selling the maize at what it calls 'negotiated prices' below those prevailing in the market at the time, the team specifically criticises the manner in which one firm associated with a former nominated MP was allocated part of the maize without the normal tendering procedures being followed.
The report noted that the tender committee granted approval to sell only 50,000 metric tones of maize to Holbud Ltd. but senior management authorised the sale of another 50,000 metric tones without reference to the tender committee.
Some senior managers learnt of the sale of the extra maize only during a staff meeting three days after the contract had been signed between the cereals board and Holbud, the report states.
The report goes on to state that at the time Holbud was allocated 50,000 metric tones of maize, it had not even inquired about buying it, nor made an offer for it. The inquiry had come from another firm associated with the former MP, Milly Grain Millers, the report stated.
The directors of Holbud at the time were Mr Mahamoud Gulamhussein Khaku, Mr Shaukat Akberali Merali, Mr David George Rowe and Mr Bimal Shaabarwal, all of whom were listed as British citizens.
The former MP, although not a director of the firm, signed the contract on behalf of the company as its local representative.
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