KTDA to face investigations over allegations of monopolistic tendencies

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President Uhuru Kenyatta. When he attended Mashujaa Day in Kakamega. He is not happy with the way things are going on in the agriculture sector. PHOTO/PSCU.

By ABDULHAKIM SHERMAN

newsdesk@reporter.co.ke

The Competitions Authority of Kenya has asked the Agriculture and Food Authority to immediately institute investigations against the Kenya Tea Development Agency (KTDA) over allegations of monopolistic tendencies.

The competitions body says that it has received complaints from Kiru Tea Factory Company Ltd (KTFC) that KTDA has created monopolistic tendencies to the extend that it vetoes, invalidates and vets decisions and resolutions of the tea company without any legality.

A letter dated September 21, 2018 written by, Ms Stella Onyancha, Director Competition and Consumer Protection at the Competitions Authority of Kenya says that KTDA Holdings Ltd and KTDA Management Services Ltd have been accused of misguiding Kiru Tea Factory Company Ltd and offering wrong opinions and implementing them with impunity.

Ms Onyancha’s letter to the Agriculture and Food Authority says in Part; “Our position is that you should seize of this matter and conclude it as per the law governing your mandate. In case your law does not provide for the above, we wish to advise the need to revise it and include such powers.”

Ms Onyancha added that the issue concerning KTDA alleged monopolistic tendencies and the need for them to be regulated by the Agriculture and Food Authority had been communicated to the Senate Ad hoc committee on tea sector in Kenya.

Agriculture CS Mwangi Kiunjuri. President Uhuru Kenyatta has said he risks being prosecuted if he is not going to deal with cartels in the agriculture sector. PHOTO/COURTESY.

The latest allegations against KTDA follows the release of a report Tea Industry Status Report prepared by the Tea Board of Kenya that says tea farmers are not being paid any dividends from KTDA subsidiaries contrary to the law.

The Tea Industry Status Report says while KTDA has used farmers resources to establish seven subsidiary companies, farmers are not being paid any dividends by the seven companies.

The KTDA affiliate companies include KTDA Holdings Ltd owned by tea factories which belong to farmers, KTDA Management Services Ltd, which oversees tea cultivation, payments, processing and trading and Chai Trading Company Ltd that undertakes tea trading and warehousing.

Others are Majani Insurance Brokers, involved in insurance and tea warehousing, Kenya Tea Packers Ltd, that undertakes tea blending, packaging and marketing, Greenland Fedha, that offers microfinance services, KTDA Power Company Ltd, involved in energy investment and power generation and KTDA Foundation that does corporate social responsibility initiatives.

The runaway problems in the tea sector come at a time President Uhuru Kenyatta has expressed his reservations at the way the Cabinet Secretary for Agriculture Mwangi Kiunjuri is handling the agriculture docket.

KTDA chairman Peter Tirus Kanyago whose body has been accused of monopolistic tendencies. PHOTO/COURTESY.

During the Nairobi Agriculture Show of Kenya the president warned the CS that he risked being sacked if he did not address the problems facing maize farmers in Rift Valley after more than Sh 2.5billion set aside to pay them was misappropriated.

And during the Mashujaa Day celebrations in Kakamega County, President Kenyatta reiterated his warning to the Agriculture CS that unless he dealt with cartels exploiting sugar farmers in western and the country at large he risked being prosecuted as well.

Tea farmers have also accused the Agriculture CS of failing to address the problems facing the tea sector especially underhand dealings at KTDA that are denying them billions of shillings in dividends and bonuses.

The letter from the Competitions Authority of Kenya says that KTDA has been accused of failing to be transparent, accountable and participatory in its marketing, investments, strategies and operations and is overcharging Kiru Tea Factory Company Ltd on management fees at a rate of 2.5 percent.

“KTDA have failed and underperformed on compliance issues hence making KTFC suffer excessive penalties by KRA due to non-performance of the management agent,” the letter Competitions Authority of Kenya says.

It adds that KTDA has ignored the objective terms and conditions of the management agreement and the legal identity and independence of KTFC, its Board of Directors and individual directors.

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