By Abdi Hussein
mThe loss-making East Africa Portland Cement Company (EAPCC) has surrendered a prime piece of land to pay a Sh 5bn loan owed to Kenya Commercial Bank (KCB).
The company transferred 745 acres in Athi River, Mavoko valued at Sh 5bn as an installment of the loan that accrued to Sh 6.6bn owed to the bank.
The process was validated by the Commercial
court in Nairobi recently because the Lands Act stipulates that for a state
corporation to sell a piece of land to offset a loan, the process has to be
validated by a court of law.
The two parties reached the agreement for the debt laden EAPCC to evade the auctioneers hammer because KCB was holding the piece of land title deed as collateral against the loan.
The transaction was made despite
four private entities including squatters occupying the land bidding to buy it
KCB is said to have paid for the land stamp duty to allow the title transfer.
Central bank of Kenya(CBK) prudential guidelines do not allow a commercial bank to hold land for more than 24 months but the bank also has a responsibility of recovering depositors money.
High court advocate Daniel Kanchori questioned the process terming it illegal and unprocedural, considering the matter involves two partly tax payers owned institutions.
The land is occupied by hundreds of squatters with active schools, churches, hotels and agri-business in full operation.
In 2019, EAPCC passed a board resolution to dispose part of its 16,000acres piece of land to raise Sh45bn and settle debts to turn around the company.
In an extraordinary meeting held on 27th September 2019, KCB was to be given the first priority in the sale of the land to recover its Sh5.4billion debt the cement manufacturer owes the institution and Sh600 million accumulated in interests and penalties annually.
Apart from KCB, several other institutions were to be considered and the balance was to be used to revamp the struggling cement manufacture.
However, a split between the company management and some members of the board over mode of sale resulted to boardroom intrigues .
One faction is said to have been pushing for Eapcc to sell the land and pay KCB while the other wanted KCB to sell the land and remit the surplus to Portland accounts.
It is during that period, the Board asked saw the then acting Managing Director Mr Stephen Nthei to proceed for a 40 days annual leave from February 8th this year.
As he began his leave, the board appointed Mr Daniel Kiprono, who was then head of internal audit, as the acting Managing Director of the company on the same day.
When Mr Nthei 40 days leave elapsed the board extended his leave by five more days up to the end of April 2021 when he returned and found his office occupied by Mr Kiprono.
Prior to his appointment as Acting
Managing Director Mr Nthei served as Head of Finance with his contract
expiring in Oct 2022 but that position was also occupied further complicating
matters for him.
For two weeks he operated from the acting Managing Director’s office until May 5, 2021when he existed on mutual agreement terms after working for the company for 14 years.
“The board considered the various options and settled on the option that you will be paid your terminal dues up to the end of your contract,” read part of the letter issued to Mr Nthei signed by Kiprono.
County Press has learned the board decision was reached to avoid protracted court battles that could taint the struggling company’s image.
Mr Nthei claims he was a sacrificial lamb by a section of board members who did not favour surrendering the piece of land to KCB but instead rooted for an outsourced buyer.
“I refused to be compromised on the sale of land and I was in the verge of implementing the company turn around strategy,” Nthei told County Press.
He is credited for reducing human capital wages from Sh130million to Sh60million monthly and reducing electricity debt from Sh500million to Sh200million.
The new development comes in time when the Machakos Environment and Lands court has dismissed a case filed by East African Portland Cement Company(Eapcc) challenging recommendations of the Ndung’u Land Commission Report on illegal and irregular allocation of public land.
In the report released 17 years ago, the Commission recommended revocation of titles allocated to the cement maker for 22 land parcels in Machakos and Kajiado counties. The Commision had said the allocation of public land was illegal and irregular.
Justice Oscar Angote dismissed the case, saying the company failed to challenge the Commission’s recommendation within reasonable time.
An insider told County Press that the cement production at the plant is dwindling as suppliers and suppliers have also not been paid.
The recruitment process of a Managing Director is underway supposed to replace or confirm Kiprono for the position.
Like Mr Nthei,his predecessor Simon Ole Nkeri existed following boardroom wars before the end of his contract in what has become a common trend to most CEOs in the last 18 years.
In 2018, EAPCC sold 900 acres at Sh5.2 billion to Kenya Railway Corporation for construction of an inland port currently underway.
Approximately 4,256 acres has been surrendered to the government for affordable housing projects.
Attempts to reach the MD Kiprono or
board Chairman Edwin Kinyua for comments were unsuccesful.