Court Halts Controversial Sh15 Billion Rice Import Deal Amid Fraud Claims

The High Court in Mombasa has thrown a spanner in the works of a controversial rice importation deal worth Sh14.8 billion, issuing interim orders that have exposed what appears to be a scandalous procurement process riddled with irregularities and potential fraud.

Justice Jairus Ngaah’s ruling has effectively frozen the Agriculture and Food Authority’s attempt to reallocate a massive 250,000 metric tonnes rice import quota to four largely unknown private firms, bypassing established procurement procedures and potentially defrauding legitimate bidders of billions in business.

The dramatic court intervention came after Ibrahim Muhumed Mohamed and Abdiaziz Moge Noor filed an urgent petition challenging what they described as a brazen attempt by AFA to circumvent legal processes and hand over lucrative import quotas to politically connected individuals outside the lawful tender process conducted by the Kenya National Trading Corporation.

Web of Suspicious Dealings

Investigations reveal that four firms – Zyan Agencies, Ecoview Commodities, Njema Commodities and Solid Commodities – mysteriously emerged as the beneficiaries of this lucrative deal despite not being among the original 60 companies initially considered for the contract.

Even more shocking, these firms edged out 16 legitimate bidders who had already been notified by KNTC on September 9 that they were successful, only to be told the following day that the corporation had “chosen to go a different route.”

The procurement process has all the hallmarks of a well-orchestrated scam.

Records show that some of these companies are barely established entities with questionable credentials. Zyan Agencies, owned by Ibrahim Murie Ibrahim, was incorporated in 2018 but operates from an undisclosed building on Nairobi’s Standard Street.

When contacted, the phone number listed in official records led to a woman who claimed to know neither the owner nor the company.

Solid Commodities, owned by Haroon Omar Bachoo, was incorporated as recently as October 2024 – less than a year ago – yet somehow secured a share of this multi-billion shilling deal. The timing raises serious questions about how a company barely 11 months old could compete with established importers and emerge victorious in such a massive tender.

Pattern of Corruption

This latest scandal comes barely a year after KNTC’s former CEO Pamela Mutua was fired following investigations that revealed contracts worth Sh6.85 billion were awarded to politically connected individuals in violation of procurement laws.

The similarities between that scandal and the current controversy are striking, suggesting that little has changed in the corporation’s procurement culture despite the shake-up in leadership.

The court’s intervention has revealed the extent to which powerful forces were determined to manipulate the system. AFA’s decision on September 10 to revoke KNTC’s allocation, followed by KNTC’s own notice on September 17 cancelling the original tender, appears to have been a coordinated effort to create space for the preferred bidders to walk in through the back door.

International Pressure and Lobbying

Adding another layer of intrigue to this saga is the revelation that Pakistan’s High Commission in Nairobi had been actively lobbying KNTC CEO Lucy Anangwe to grant preferential treatment to Pakistani firms. In a September 12 letter, Pakistani officials requested “favourable consideration in granting preferential treatment for the allocation of rice imports” and sought clarification on procurement procedures to enable Pakistani exporters to engage with the Kenyan market.

While KNTC reportedly dismissed this lobbying effort, the timing of the request, coming just days after the original 16 bidders were informed of their success, raises questions about whether other behind-the-scenes negotiations were taking place.

The financial implications of this scandal are staggering. With the government having revised its valuation of grade one white Pakistani rice to $460 per metric tonne, the total consignment is valued at approximately Sh14.8 billion.

Import duty waiver, an annual ritual Kenya uses to plug its rice deficit of nearly 800,000 tonnes, makes this an even more attractive deal for the beneficiaries.

The 16 legitimate bidders who were initially awarded contracts now face the prospect of missing out on business they had every right to expect. Some may pursue legal action against KNTC, potentially exposing the corporation to millions in damages – costs that will ultimately be borne by taxpayers.

Justice Ngaah’s ruling represents a rare victory for transparency and due process in Kenya’s procurement system.

His orders restraining AFA “from issuing, reallocating, or otherwise purporting to allocate the 250,000 MT rice importation quota to any private individuals or entities outside of the lawful tender process” send a clear message that the courts will not tolerate blatant manipulation of public procurement.

The judge also suspended both AFA’s decision to revoke KNTC’s allocation and KNTC’s own notice cancelling the original tender, effectively freezing the entire process pending further court directions.

The matter has been set for mention on October 23 for further directions, giving the respondents seven days to file their responses and explain their actions to the court.