Dubai Kebs inspection agent sues Kenya firm for fraud

A Dubai-based company, Geo Chem Middle East, has accused a Kenyan firm with a similar name of trying to defraud it of Sh296 million by filing a court case claiming the amount from the Kenya Bureau of Standards (Kebs).

The UAE firm, a Kebs inspection agent, says a suit filed by Nairobi-registered Geo Chem Middle East Limited against the regulator is an attempt to defraud it of the colossal sum, as it neither has a Kenyan agent nor has it instructed anyone to move to court.

The Kenyan firm sued Kebs and the Kenya Revenue Authority last month claiming the amount allegedly arising from inspection of oil products imported to Kenya.

The Nairobi-based firm says Kebs contracted KRA to transfer payment for the services to it so as to ensure the fuel was correctly taxed.

“A sum of Sh296 million is currently being held by either Kebs or KRA for the services rendered. My client is based in Dubai and is currently in arbitration with Kebs.

“Strangely this suit seeks that the said amount be paid to the plaintiff in the pretext that it is the same as Geo Chem Middle East (without limited),” lawyer Fred Ngatia for the Dubai firm told the court.

Justice David Onyancha ordered the Nairobi firm’s director Kenny Alois Kioko to appear before the court today in person with the company’s incorporation documents.

He has also ordered the firm’s lawyer, Joseph Nzioka, to appear in person to give evidence that it hired him to sue Kebs and KRA.

He issued the order after Mr Ngatia, Kebs and KRA lawyers agreed to halt any proceedings of the case and summon Mr Kioko and Mr Nzioka, who did not attended the court proceedings.

The Ministry of Industrialisation and Enterprise cancelled the Dubai firm’s contract in April 2010 arguing that the tendering process a year earlier was flawed.

This was after the company increased inspection fees from 0.2 per cent to 0.675 per cent of the cost of insurance and freight that consequently raised fuel pump prices.

Apart from fuel products, all imports with freight-on-board value of more than Sh40 billion, must undergo a pre-shipment inspection for quality, quantity and price. Mr Kioko in suit papers says he had sent demands to Kebs for the amount, but that the regulator held that KRA is holding the amount.

“Kebs has admitted the amount claimed by Geo Chem Middle East Limited, but says KRA has refused to release it. Unless this court orders the defendants to release the amount, Geo Chem Middle East Limited will suffer irreparable loss and damage,” Mr Kioko said in a sworn affidavit.

The Nairobi firm has attached letters from the Ministry of Industrialisation terminating Geo Chem Middle East’s contract for inspection of oil products imported to Kenya as evidence in its claim.

It had asked that Kebs deposits Sh296 million in court until the suit is determined.

It adds that Kebs terminated its contract in April 2010 unfairly and without proper notice as required by law, despite it performing the duties specified under the deal.

Justice Onyancha further ordered that the case file be kept under lock and key by the High Court deputy registrar and only produced in court when it comes up before him on Monday.