Kakuzi directors to face criminal financial probe after High Court’s nod

Eight directors of the British owned agricultural firm, Kakuzi PLC will now face probe over alleged massive financial impropriety and conflict of interest claims after the High Court nod allowing the investigation paved way for the Capital Market Authority (CMA) despite previous attempts to block the same.

High Court Judge Justice Anthony Mrima dismissed the directors’ appeal, finding no procedural impropriety under the constitution or law and calling the stoppage bid “premature.”

Investigations will be conducted against Kakuzi PLC Chief Executive Officer (CEO) Christopher Flowers, Nicholas Ng’ang’a, Graham Mclean, Andrew Njoroge, Ketan Rameshchandra, Daniel Ndonye, Stephen Waruhiu and John Kimani.

In their failed stoppage bid, the directors had argued the inquiry violated their right to a fair hearing and lacked particulars of alleged impropriety.

However, Justice Mrima ruled that the probe by CMA cannot be faulted on account of procedural impropriety, whether under the constitution or the law.

The judge added that the company and its directors failed to prove any violation of their rights and fundamental freedoms, for the court to intervene.

“The appellants’ actions also seem to be premature. As such, the contention is for rejection,” said the judge.

This is the second time the directors have failed to stop the probe, after a similar application was dismissed Capital Markets Appeals Tribunal, in September last year.

Justice Mrima directed the matter be expedited noting that probe was instituted in 2021.

CMA is examining management and operational services agreements between Kakuzi and Robertson Bois Dickson Anderson Ltd (dated December 11, 2017) and Eastern Produce Regional Services Ltd, as well as dealings with related entities including Eastern Produce Kenya Ltd, EPK Empowerment Company (Kenya) Ltd, Lintak Enterprises (K) Ltd, Linton Park (Kenya) Ltd and Siret Tea Ltd.

The judge noted they were notified via summons on June 14, 2021, provided requested documents, and met the regulator during the process, with records showing ongoing cooperation.

He also observed that an internal corporate governance report dated November 15, 2020, did not preclude the CMA’s audit driven inquiry. This is the second failed attempt to halt the probe after a similar application was rejected by the Capital Markets Tribunal in September last year, and Justice Mrima ordered the matter expedited.

The directors had faulted the probe, which commenced in June 2021, arguing that the entire process was not fair and did not meet the constitutional requirements of right to fair hearing.

The directors blamed the regulator stating that it did not state why it withheld the particulars of the alleged financial impropriety or give reasons for the failure to provide the nature of the complaints received from alleged third parties.

They further submitted that they were within their constitutional rights to not only request information concerning the allegations raised against them, but also the evidence and materials relied upon by the CMA.

But the judge said a look at the proceedings revealed that the directors were made well aware of the inquiry and the summons on June 14, 2021 were clear on the purpose and the extent of the inquiry.

“The summons also called for specific documents which the Appellants provided followed by a meeting between the Appellants (directors) and the Respondent (CMA) to aid the Respondent further the inquiry. All along, the Appellants co-operated with the Respondent although it seems they filed the instant appeal in between,” said the judge.

Justice Mrima said there was ample evidence on record showing that whenever any issue arose, the parties discussed and eventually agreed on the best way forward.

On the argument that the company had dealt with issue of corporate governance in a report dated November 15, 2020, the court said the tribunal demonstrated how the inquiry was different from the report.

“It further amplified why the findings of the Report, which Report is an annual requirement in law, cannot compromise the inquiry which was initiated pursuant to an audit,” said the judge.

The regulator said in its filings that it had sufficient cause to conduct the investigation, which centered on Management and Operational Services Agreements signed between Robertson Bois Dickson Anderson Limited and Kakuzi on December 11, 2017 as well as the Management and Operational Services Agreements signed between Eastern Produce Regional Services Limited and the agricultural firm.

The regulator also intended to probe business dealings and agreements with related companies including Robertson Bois Dickson Anderson Limited, Eastern Produce Kenya Limited, EPK Empowerment Company (Kenya) Limited, Lintak Enterprises (K) Limited, Linton Park (Kenya) Limited and Siret Tea Limited.