Home News Grain Bulk dragged into court over illegal auction of Sh730M wheat

Grain Bulk dragged into court over illegal auction of Sh730M wheat

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[Atta Kenya lawyer Miller Bwire cross-examining Grain Bulk Handlers Legal Officer , Joseph Mwela. Photo/Ahmed Omar/February, 24, 24].

An importer, Atta Kenya Limited, is demanding Sh730 million from Grain Bulk Handlers Limited for allegedly selling its 13,000 metric tonnes of wheat that was being stored at the silos in Mombasa.

In a suit filed at the Mombasa High Court (HCC No E30 of 2020), Atta Kenya accuses Grain Bulk, Kenya Revenue Authority, Grain Industries Limited and Beyond Auctioneers of illegally auctioning their wheat despite an attempt to stop the sale.

According to the court documents, Atta Kenya avers that between 2013 and 2014, together with its sister company, Premier Flour Mills, entered into various contracts with Louis Dreyfus Company Limited (LDCI) to purchase 38, 500 metric tonnes of milling wheat.

Out of the 38,500 metric tonnes imported, 29, 500 metric tonnes belonged to Atta Kenya and were shipped into Kenya through two vessels; Kiran Marmara and Clippers Bliss.

Kiran Marmara brought in 12,500 metric tonnes of wheat worth USD 4,062,875 and Clippers Bliss brought in 17,000 metric tonnes of wheat worth USD 3,502,680

The total consignment was worth USD 7,565,555.

The 12,500 metric tonnes was Ukrainian wheat imported on June 3, 2014, and the second consignment of 17,000 metric tonnes was Russian milling wheat imported on March 6, 2016.

However, Atta Kenya fell into arrears of the contractual storage charges payable to the Grain Bulk Handlers and statutory custom charges paid to KRA after its bank failed to honour its financing obligation

The company said it applied for a waiver of custom warehouse arrears, which was waived to 30% of the accrued rent vide a letter cited September 8, 2017.

Atta also engaged Grain Bulk intending to be allowed to organise an alternative financing of the storage charges.

“However, despite the pending engagement, Grain Bulk Handlers engaged its lawyer and Beyond Auctioneers with a view of recovering the storage charges through auctioning,” said Atta Kenya.

Conflict

On April 21, 2027 Beyond Auctioneers, placed a gazette notice number 3912 claiming it would sell some of the 13,196 metric tonnes of assorted wheat.

On June 17, 2017, Beyond Auctioneers placed a notice on Saturday nation inviting bids for the sale of the 13, 196 metric tonnes. The auction was purportedly held on June 17, 2017, where Grain Industries emerged a winner.

After the purported auction, LDCI (the company that sold wheat to Atta Kenya) moved to court to stop the sale of some 6,964 metric tonnes of wheat, saying Atta Kenya had not paid USD 2, 263, 759.

Atta objected, saying it paid the full amount for the purchase of wheat from LDCI, and other incurred charges by Kenya Revenue Authority, Kenya Ports Authority and purchase of custom bags and custom warehouse charges.

However, during the pendency of the suit, Atta Kenya received yet another letter from Grain Bulk Handlers lawyer, saying the wheat had been sold to Grain Industries for Sh217,475,252.

Despite the letter being dated July 3, 2017, Atta Kenya said they came to know about the existence of the letter in early September of that year.

“The wheat sold was undervalued as it was not sold at the price it was purchased. Atta said it paid USD7,565,555 exclusive of taxes, port charges, storage charges for the purchase of the 29,500 metric tonnes,” read the court document.

From the purported auction, the wheat was sold at only Sh217,475,251.

Atta Kenya was paid only Sh28,492, 951 after Grain Bulk subtracted the storage charges and other various charges that had accrued.

Demands

“The plaintiff states that it is entitled to the sum of Sh730,292, 207 together with interest and lost profits,” Atta Kenya told the court.

On Monday, Grain Bulk Handler legal officer Joseph Mwela was at pains to explain why the company was in a rush to auction the wheat, despite undertaking from Atta Kenya to settle the accrued storage charges.

Atta Kenya’s lawyer Miller Bwire, while cross-examining Grain Bulk Handlers’ Mwela, questioned the relationship of shareholders of Grain Bulk Handlers and Grain Industries Limited.

They were appearing before Mombasa High Court Judge Florence Macharia.

“In the company registration forms of both Grain Bulk and Grain Industries, some names of the shareholders appear in both documents, are you able to explain,” Bwire questioned Mwela.

He also questioned why some 18 trucks belonging to Grain Industries were loaded with wheat from Grain Bulk premises prior to the purported day of auction.

Mwela defended the company saying Grain Industries are also their clients, who import grains through Grain Bulk Handlers.

On Wednesday, during the second day of cross-examination, two witnesses of Grain Bulk Handlers, also struggled to explain how the company arrived at the figure of Sh200 million for the wheat consignment.

The hearing of the case will continue on March 14.

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