Zakhem International Accused of Sh537 Million Fraud, Faces Liquidation

Nairobi — Lebanese construction giant Zakhem International is staring down a potentially devastating liquidation after allegedly failing to pay a Sh537 million debt to a Kenyan subcontractor, Azicon Kenya Limited, despite having received full compensation from the Kenya Pipeline Company (KPC).

Azicon, which provided electrical, instrumentation, and telecommunication installation services for the Mombasa-Nairobi pipeline upgrade, claims it completed the work in 2018 and received formal certification for payment in March 2019. However, more than six years later, the balance remains unpaid .

Zakhem had subcontracted Azicon as part of the Sh48 billion pipeline replacement project commissioned by KPC in 2014.

While Zakhem received full payment from KPC, it only transferred Sh840 million to Azicon, leaving a balance of Sh537.3 million (approximately $4.16 million), which the Kenyan firm says has never been disputed but remains unpaid .

In a damning ruling, High Court judge Lawrence Mugambi dismissed Zakhem’s attempt to block insolvency proceedings, declaring that the company had failed to comply with a statutory 21-day payment demand served in January 2025.

“It is, therefore, [Azicon’s] reasonable conclusion that, by failing to comply… Zakhem International is unable to pay its debt and is consequently liable to be liquidated,” Justice Mugambi stated .

This isn’t the first time Zakhem has faced legal trouble with subcontractors.

In a separate case last year, another firm, Multiple ICD (Kenya) Ltd, sued for Sh670 million, even obtaining a court order to freeze KPC accounts—an order later lifted when it emerged that KPC no longer held any money for Zakhem .

Azicon’s Managing Director, David Kibet Tonui, had previously obtained a court order in 2020 compelling Zakhem to pay the outstanding amount, but enforcement has been frustrated by what the firm describes as deliberate non-compliance .

Court affidavits from both Zakhem and KPC confirm that the Lebanese firm was paid in full and later withdrew its own lawsuit against KPC—evidence, the court found, that the money was indeed received. This leaves Azicon legally cleared to pursue liquidation and asset auction to recover the debt .

The case lays bare the vulnerability of local firms in high-stakes infrastructure projects often dominated by foreign contractors.

As the court prepares for final determinations, the fallout could mark a turning point in how Kenya handles foreign firms accused of financial malpractice against local partners.