Broke Zakhem International Unable to Pay Sh460 Million Debt, Attempts to Play Court

A once powerful Lebanese contractor at the heart of Kenya’s flagship pipeline project is now staring at financial ruin, with court filings painting a picture of a company that cannot pay its debts and is desperately manoeuvring through the justice system to buy time.

Zakhem International Construction Limited is locked in a bitter Sh460 million debt battle with Kenyan subcontractor Azicon Kenya Limited, a dispute that has dragged on for years and is now tipping into full blown insolvency proceedings. The High Court has in recent weeks delivered a fresh blow to the foreign firm, rejecting its attempt to suspend contempt of court proceedings even as a liquidation petition hangs over its head  .

At the centre of the fight is unpaid work on the multibillion shilling Mombasa to Nairobi oil pipeline replacement project commissioned by the Kenya Pipeline Company.

Azicon says it was hired by Zakhem to carry out electrical, instrumentation and telecommunications works under a subcontract worth about Sh1.3 billion. While the Lebanese firm was allegedly paid in full by KPC, Azicon claims it only received about Sh840 million, leaving a balance of more than Sh460 million that has remained unpaid since 2020  .

Court records show that Azicon obtained a decree compelling Zakhem to settle the debt, but years later the money has not been forthcoming. Instead, the Lebanese firm has mounted a string of legal objections, arguing that enforcement proceedings, contempt applications and insolvency suits amount to double jeopardy. Judges have been unconvinced, with the High Court noting that Zakhem had approached the wrong court and failed to follow basic procedural rules in its latest bid to halt the proceedings  .

Behind the legal skirmishes lies a more damaging allegation. Azicon has accused Zakhem International of deliberately stripping itself of assets to frustrate creditors, including transferring dozens of vehicles and parcels of land to related companies with no known commercial activity. The Kenyan firm has asked the court to lift the corporate veil and hold individuals personally liable, arguing that the transactions were designed to render Zakhem judgment proof.

Zakhem denies wrongdoing and insists it is being unfairly hounded, at times claiming it was still awaiting payment from KPC. That position has been contradicted in court by affidavits showing that the state oil firm is not holding any funds on its behalf, a contradiction that has further weakened Zakhem’s credibility before the bench  .

The insolvency petition now before the High Court could mark the beginning of the end for Zakhem’s operations in Kenya. If the court finds that the company is unable to pay its debts as they fall due, liquidation could follow, exposing directors to personal risk and sending a chilling message to foreign contractors operating in the country.

For local suppliers and subcontractors, the case has become a symbol of the power imbalance in mega infrastructure projects, where small Kenyan firms can be left gasping for years as well funded foreign contractors deploy legal firepower to delay payment. As one judge warned in open court, decrees are not decorative pieces of paper.

Zakhem’s fall from grace is stark. From handling strategic national infrastructure, the firm is now fighting to stay out of civil jail, accused of asset concealment and staring down the prospect of liquidation. For Azicon and other creditors, patience appears to have run out.