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"id": 226761,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/226761/?format=api",
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"speaker_name": "[Mr. Khamisi]",
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"legal_name": "Joseph Matano Khamisi",
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"content": "the co-operative union held 35 per cent representing cashew farmers from Kilifi, Lamu, Kwale and Malindi. Later, in 1993, ICDC, IDB and NCPB agreed to transfer their shares to the Kilifi Co- operative Union in an exercise of the union's pre-emptive rights under the joint ownership agreement. Mr. Deputy Speaker, Sir, according to documents available, the vendors duly executed the transfer of shares to the Kilifi Co-operative Union at the cost of Kshs75 million. However, something strange happened at that time. The directors of the Kilifi District Co-operative Union, namely; Messrs. D. Runya, who was the General Manager, Mr. Japheth Kabuku who was the Chairman and Gunga who was the Vice-Chairman, did not register the 65 per cent shares as required by law and, instead, entered into private discussions with certain individuals who were at that time politically-correct. Those individuals were Mr. J. Kulei; Mr. Y.C. Desai; Mr. N. Korir; Mr. B.K. Rotich; Mr. P.K. Shah and Mr. W.K. Sambu. These are the individuals who benefited from the shares of the company. Mr. Deputy Speaker, Sir, this means that although the 100 per cent shares were legally sold to the union by the three parastatals, they were never legally transferred to the union. Instead, the directors of the union signed forms selling shares to the two companies belonging to the individuals mentioned above. The individuals represented a company called the Kenya Plantations and Products Limited which was allocated 51 per cent shares and the other was the Cashew Development Investment Limited which got 14 per cent. That means that the union remained with its original 35 per cent shares. This was not only against the Co-operative Act but it also abused the pre-emptive rights conferred to the society under the joint ownership agreement and it was, therefore, fraudulent. This transaction also deprived the cashew farmers from this region their rightful number of 510 PARLIAMENTARY DEBATES April 11, 2007 shares which was 35 per cent. It is, therefore, my informed view that these individuals who entered into a fraudulent transaction with the subjects mentioned above, should be subjected to investigations to determine their individual and collective roles in the irregular disposal of shares belonging to the union. The directors of the union must be in a position to explain why they purported to transfer the shares of the three parastatals to the union while, in fact, they did not. They should also explain and also answer the question why they traded with the union shares without the approval of the Board. It is also in the interest of the House to find out why Mr. Runya, who was the Manager of the union was also a director of the Kenya Cashewnut Factory. To me, this was a clear conflict of interest. Mr. Deputy Speaker, Sir, during the Public Investment Committee (PIC) proceedings in 1991, the Secretary of the union, Mr. S. Mweri admitted that the union did not buy shares from anybody and therefore, did not sell any. If that is the case, then what happened between the time of the disposal of the shares by the three parastatals and the time when the two strange companies came into possession of the shares? How did the directors come into contact with the officials of those two companies? Why did they not exercise the pre-emptive rights as provided by the law that would have allowed the union to take possession of the shares? Also, if the directors of the union wanted to sell the shares to the third parties after exercising their pre-emptive rights, they should have sought the Board's permission and also the endorsement of the Commissioner of Co- operatives. This was not done. The proposed Select Committee would also like to question both the directors of the union, the chief executive officers of the three parastatals and the individuals mentioned above, to find out what really happened. Also of importance is, who paid the Kshs78 million to the three parastatals? Was it the union which was at that time in financial trouble or was it the individuals that have been mentioned above? Mr. Deputy Speaker, Sir, a director of the union admitted to the PIC meeting in 1991, that the money actually came from certain individuals whom he did not name and not the union. What was the deal? That is the question that we want to ask. It also appears that after the purported sale of the company to the Kenya Plantations and Products Limited and the Cashew Development Investments Limited, the co-operative union ceased to be an active member of the management team, despite the fact that it held 35 per cent shares. The union was no longer represented in the Board at that time, and the activities of the Kenya Cashewnut Factory were fully in the hands of the new Managing Director, a Mr. P.K. Shah, one of the people that I have mentioned above. Why was the co-operative union excluded from the running of the factory, despite the fact that it held 35 per cent of its shares? With the exclusion of the union from the management, farmers were no longer represented in the company. What was going on? This Select Committee will want to know this. Mr. Deputy Speaker, Sir, soon thereafter, Mr. Shah, and his partners, began to cannibalise property at the Kilifi Factory, transferring machinery and equipment to the Kenya Bixa Ltd, a company owned by some of the directors of the two companies that I have mentioned above. The property that was transferred illegally from the Kenya Cashewnut Factory included a whole macadamia cracker unit, 200 plaster cranes, one electronic weighing scale of 20-kilogramme capacity, shelling machines, calibrators, computers, printers and fax machines. The whereabouts of this equipment is unknown at this stage. Other equipment included refrigerators, trolleys and all the other equipment that has to go with the shelling and preparation of cashewnuts. Mr. Deputy Speaker, Sir, following that raid on the company that was undertaken by these individuals, the factory was rendered completely useless and in-operational. Thousands of farmers in Kilifi, Kwale, Malindi and Lamu were left \"orphans\" by the closure of this company. At that time, this company employed over 3,000 people in Kilifi. The closure of this company meant that April 11, 2007 PARLIAMENTARY DEBATES 511 these people were no longer employed, and the economy of the Kilifi region tumbled and caused untold misery and poverty in the area. A thorough investigation must be undertaken to unearth circumstances that led to the closure of the Kilifi Cashewnut Factory. Mr. Deputy Speaker, Sir, it appears to me that one act of corruption led to another. It is my submission that those found to have been involved in the plunder and collapse of the factory must be apprehended and prosecuted. At the moment, these people are roaming streets as free men, while thousands of farmers continue to suffer as a result of loss of their means of livelihood. A conclusive investigation can only be done by the Select Committee being proposed in this House today. Mr. Deputy Speaker, Sir, the hearings of the Public Investments Committee (PIC) in 1991 left the matter hanging, with no clear direction to the Government as to how it should proceed to resolve this matter. People who were allegedly connected with this matter were not called in by the PIC to offer evidence as to exactly what their role was in the closure of the Kilifi Factory. Mr. Deputy Speaker, Sir, I am appealing to my colleagues to support this Motion wholeheartedly, so that the culprits involved can be brought to book. As I said earlier, this Government is committed to the fight against corruption. Any action that it takes at this moment will be seen as a realisation of the dream to end corruption and sleaze in this country. It is through the action proposed by this Motion that this House will be seen to have taken a serious intervention in the fight against corruption. Mr. Deputy Speaker, Sir, having said all that, I would also like to say that after the formal collapse of this company in 1985, it fell into the hands of other individuals. We do not want to dwell on the present ownership, but we would like to give notice that what happened to the original Kenya Cashewnut Factory was fraudulent, illegal and totally anti-people in Kilifi. With those remarks, I beg to move and ask hon. Lucas Maitha to second the Motion."
}