Woes at Kenya Seed are far from over

By John Njiraini

Late last year, the Government pulled a major victory against a known valiant fighter. After a protracted legal battle spanning about seven years, the Government finally wrestled the ownership of Kenya Seed Company (KSC) from Nathaniel Tum.

To those who have interacted with Tum, particularly employees who worked under him during his 20-year reign as Kenya Seed managing director, this was a significant achievement on the part of the Government.

Tum is known to be aggressive.

"What I remember most about Tum is that employees really feared him," said a long serving manager at the company.

The feeling that Tum was a larger than life personality to many was also visible in Agriculture Minister Sally Kosgey said while announcing the victory last month.

"After a long battle, I must say this is a great moment for Kenyans because we have managed to reclaim Kenya Seed from individuals who acquired the company illegally," said Kosgey.

Lengthy process

Contacted by the Financial Journal, Tum acknowledged the battle for ownership of the company has been lost.

"We have lost the case and Kenya Seed is now a parastatal, that is all," he said.

But the conclusion of the various court cases fought both in the High Court in Nairobi and Kitale and the Court of Appeal in favour of the Government could be the easier part.

According to Kosgey, the Government plans to embark on an assets recovery mission to ensure that all properties belonging to Kenya Seed like land, vehicles, motorbikes and even typewriters that were transferred to private ownership revert to the company.

"The cases are now behind us and we plan to go after all the assets that belong to Kenya Seed," she stated.

Though Kosgey said the government was still in the process of computing assets that could have belonged to Kenya Seed and might now be in the hands of private ownership, Tum is already promising a bruising battle.

Speaking to Financial Journal, Tum said his association with Kenya Seed ended the moment he lost the ownership battle.

"I don’t have anything that belongs to Kenya Seed. Those saying those things should pinpoint one thing," he stated.

As the dispute for Kenya Seed assets shapes up, the big question in the minds of many is exactly how was the battle for the company fought and won?

By its own nature, Kenya Seed is a critical company in as far as the success of the agricultural sector in the country is concerned. Considering the sector accounts for close to a quarter of the GDP and employs about three quarter of the Kenyan population, the company is ultimately the centre pole that holds Kenya’s survival together. More importantly, the fact that Kenya Seed produces about 80 per cent of certified seeds in the country means it is also the cornerstone of food security.

Due to its strategic importance, Kenya Seed controls vast tracks of land amounting to more than 4,000 acres where it grows breeder seed, owns two seed processing plants, operates numerous storage facilities and various research facilities.

According to multiple sources interviewed by Financial Journal, court proceedings and Government audits, the battle for ownership of the company started sometime in 2000 during the dying years of the Kanu regime.

This was around the time cabals of politically connected individuals were looting public parastatals like the Kenya Cooperative Creameries (KCC), the Kenya Meat Commission (KMC) among others when the political wind started blowing against Kanu.

Though parastatals like KCC and KMC did not survive the massive looting, Kenya Seed happened to be a sinking ship that survived miraculously.

According to an audit by Inspectorate of State Corporations conducted in 2004, by the time the Government moved in, the company was indebted to the tune of Sh2 billion, owed the Kenya Revenue Authority Sh800 million in unpaid taxes and lacked a credible financial management system. During this time, the company’s turnover had shrunk to less than Sh1.5 billion.

Conflict of interest

Besides bleeding cash in dubious deals, Kenya Seed was also a cash cow. Directors openly did business with the company disregarding principles of conflict of interest.

Unfortunately, by the time the Narc Government assumed the reigns of power in 2003, the top management at Kenya Seed had already sold the company through a private placement that involved the selling of four million shares to a group of well-selected individuals. The transaction, termed as illegal by the newly-elected leadership, saw the Government’s shareholding represented by the Agriculture Development Corporation diluted from 52.88 per cent to 40 per cent.

Yet when the Government forcefully evicted the Tum-led team and replaced it with a new management and board, a major fight back ensued.

First, employees aligned to the former regime forcefully blocked the new team led by board chairman Patrick Wandabwa and managing director Hosea Sitienei from assuming office.

When this failed because the team had the backing of Government, Tum and his team went to the Kitale High Court that ruled in their favour but their efforts to return to office were met by armed police who blocked them.

But even before the new team could settle down, a mysterious fire in April 2004 gutted down the company’s head office in Kitale and destroyed records that could have offered a deeper insight into past dealings in the company.

These frustrations did not deter the Government from reclaiming the company because it went ahead to appeal against the ruling in Kitale and won, forcing the Tum-led group to seek redemption at the Court of Appeal that also ruled in favour of the Government.