Zakhem International Directors Face Jail Over Sh537m Debt

Lebanese Construction Firm’s Leadership Threatened With Imprisonment as Legal Battles Mount

NAIROBI, Kenya – The directors of Lebanese construction giant Zakhem International Construction Limited are facing the prospect of civil imprisonment after a Kenyan court application seeks to have them jailed over an unpaid debt of Sh537 million owed to local subcontractor Azicon Kenya Limited.

The dramatic escalation in what has become a protracted legal battle comes as Zakhem International, once a major player in Kenya’s infrastructure sector, faces mounting financial pressure from multiple creditors following its involvement in the troubled Sh48 billion Nairobi-Mombasa pipeline replacement project.

Court Application Filed

Azicon Kenya Limited has filed an application in the High Court seeking to have Zakhem’s directors, including Ibrahim Salim Zakhem and Abdallah Salim Zakhem – who also serves as the Honorary Consul of Lebanon in Nairobi – sentenced to civil jail for contempt of court.

The application stems from the directors’ alleged refusal to comply with a court order directing them to pay the outstanding debt, despite evidence that Zakhem International recently received substantial payments from the Kenya Pipeline Company (KPC).

“The open contempt of court decree herein warrants the arrest and committing the directors of the defendant to civil jail in the event that they continue to disregard the decree in contempt of court,” Azicon stated in its court filing.

High Court Judge Aleem Visram has scheduled the matter for hearing on July 30, 2025, after directing Azicon’s lawyers to serve the application and supporting documents on the directors.

Pipeline Project Debt Dispute

The debt dispute traces back to 2018 when Azicon Kenya was subcontracted by Zakhem International to perform electrical, instrumentation, and telecommunication installation work during the replacement of the 450-kilometer Nairobi-Mombasa pipeline. The massive infrastructure project, valued at Sh48 billion, was intended to modernize Kenya’s critical fuel transportation network.

According to court documents, Azicon’s contract was worth $10,137,424 (approximately Sh1.3 billion). However, the company claims it has only received $6,509,502 (about Sh840 million) from Zakhem, leaving an outstanding balance of $4,160,857 (Sh537.3 million).

Azicon’s Managing Director, David Kibet Tonui, told the court that his company completed all required works and was issued with the necessary completion certificates, yet Zakhem has persistently refused to settle the debt.

“Most recently, the defendant (Zakhem) refused, declined or ignored to pay the plaintiff the balance of the decretal sum plus interests despite receiving over Sh485,000,000 from Kenya Pipeline Company as per ruling dated 23rd June, 2025,” Tonui stated in his affidavit.

Pattern of Legal Challenges

The Azicon case represents just one facet of Zakhem International’s growing legal troubles in Kenya. The Lebanese firm is simultaneously battling multiple creditors and facing various court proceedings related to its Kenyan operations.

Last year, another subcontractor, Multiple ICD (Kenya) Ltd, pursued a debt of Sh670 million from the Lebanese firm. Multiple ICD had even obtained a court order freezing KPC’s bank accounts, though this was later lifted after it emerged that the state-owned company was not holding funds on behalf of Zakhem International.

At the same time, another Nairobi court is ordering Zakhem Construction Limited to settle a KSh 537.3 million debt owed to a Kenyan subcontractor Azicon Kenya Limited, marking a decisive legal blow to the firm and escalating pressure over its financial standing in East Africa.

Recent court developments have also seen Court has ordered Equity Bank Kenya to release KSh 485 million from Kenya Pipeline Company (KPC’s) accounts to Zakhem International, indicating the complex web of financial arrangements and disputes surrounding the construction firm.

Seeking Travel Restrictions

Beyond the civil jail application, Azicon is also seeking additional remedies from the court. The company wants an order preventing Zakhem International’s directors from leaving Kenya unless specifically authorized by the court, effectively imposing travel restrictions on the Lebanese nationals.

Tonui argues that the court should examine the directors personally regarding their company’s ability to settle the debt. “It is only fair and to the interest of justice that the aforesaid directors of the defendant company are examined by this honourable court on the ability of the respondent company to settle the said costs, failure to which the veil should be lifted and have them in person settle the costs from the monies received from KPC,” he stated.

The request to “lift the corporate veil” represents a significant legal strategy that could make the directors personally liable for the company’s debts, moving beyond the typical protection afforded by corporate structure.

Broader Implications

The Zakhem International case highlights the challenges facing major infrastructure projects in Kenya, where complex subcontracting arrangements can lead to protracted payment disputes. The pipeline replacement project, despite its strategic importance to Kenya’s energy security, has become emblematic of the difficulties in managing large-scale construction projects involving multiple stakeholders.

The Lebanese firm’s troubles also underscore the risks faced by foreign construction companies operating in Kenya, where legal proceedings can result in significant financial and reputational damage. The involvement of diplomatic personnel – with Abdallah Salim Zakhem serving as Honorary Consul – adds another layer of complexity to the proceedings.

For Kenyan subcontractors like Azicon, the case represents the lengths to which local firms must go to secure payment for completed work, even when dealing with established international contractors.

Legal Precedent

Should the court grant Azicon’s application, it would set a significant precedent for holding corporate directors personally accountable for their companies’ financial obligations. Civil imprisonment, while not common in commercial disputes, represents one of the most severe remedies available to courts in contempt proceedings.

The case also demonstrates the evolving nature of commercial law in Kenya, where courts are increasingly willing to look beyond corporate structures to ensure justice for creditors, particularly local businesses that may lack the resources for prolonged legal battles.

Next Steps

With the hearing scheduled for July 30, 2025, the coming weeks will be crucial for both parties. Zakhem International’s directors will need to respond to the serious allegations and demonstrate their compliance with existing court orders, while Azicon will need to substantiate its claims of contempt.

The outcome could significantly impact similar cases involving foreign construction companies in Kenya and may influence how international contractors approach their obligations to local subcontractors in future projects.

The case continues to unfold as Kenya’s judiciary grapples with complex commercial disputes that carry both legal and diplomatic implications, setting the stage for what could become a landmark ruling in the country’s commercial law jurisprudence.