Economy

Lawyer stalls JKIA catering works with Sh1bn fee demand

TERMINAL

Terminal 1A at the Jomo Kenyatta International Airport in Nairobi. PHOTO | FILE

JV Partners, the consortium that won the multi-billion shilling contract to build a catering unit at the Jomo Kenyatta International Airport (JKIA), has opened a battle with its lawyers over a Sh1.2 billion legal fee demand that now risks stalling the project.

The lawyers, Muturi Mwangi & Company Advocates, are asking for the colossal amount as compensation for their contribution in drafting the documents that enabled the consortium to strike a deal with the Kenya Airports Authority (KAA).

The JV Partners consortium comprises LSG Lufthansa, a German firm, and Apatana Investments, a company associated with businessman Matu Wamae.

The consortium’s position is complicated by the fact that the lawyers have claimed ownership of the contract agreement and want construction of the catering unit stopped until they are paid the $12.9 million (Sh1.2 billion).

Eliab Muturi, who owns the law firm, says he is yet to be compensated even as the consortium prepares to benefit from his work.

“LSG Lufthansa have used Muturi Mwangi & Company Advocates’ work and are intent on further using the product to confer themselves an economic benefit in relation to the tender eventually awarded to them by KAA,” Muturi Mwangi & Company Advocates says.

Lufthansa has disputed the claims insisting that KAA’s lawyers did most of the paperwork, making Mr Muturi’s demands unreasonable.

Lufthansa partnered with Apatana Investments, a company associated with Mr Wamae and Ndung’u Gathinji, to undertake the project estimated to be worth Sh2.25 billion ($26 million). The deal was signed in May last year.

READ: Wamae consortium secures 25-year JKIA catering deal

NAS Servair, has enjoyed a monopoly of the in-flight catering industry since Independence, and will now have a slice of the new establishment alongside Lufthansa.

The two firms named their consortium JV Partners, with the German airline acting as the lead partner. The consortium used the services of Muturi Mwangi & Company Advocates during the contract negotiations.

KAA handed over the site to JV Partners in September, a month later than expected following delays in clearing debris on site.

Mr Wamae and Mr Gathinji in September said the project is expected to be completed at the end of this year or early next year.

The consortium will thereafter run the in-flight kitchen service at JKIA for 25 years before handing it over to KAA.

Following unsuccessful legal fees negotiations between Lufthansa, Mr Wamae, Mr Gathinji and Mr Muturi, the consortium opted to part ways with the lawyer, causing him to sue, seeking payment of the colossal amount.

Mr Muturi has now accused the German airline of fraudulently instructing him to do the paperwork for the lucrative deal without compensation.

The lawyer claims that the two parties agreed on the confidentiality of any work he did for the consortium and copyrighted the same to him, making its use impossible in the event his services were terminated.

Lufthansa has held that Mr Muturi was only tasked with reviewing documents drafted by KAA’s lawyer Michael Goa a nd adding input from the consortium’s members.

“It is not correct that Mr Muturi provided transactional advice to the JV Partners. Mr Muturi’s instructions in regard to the tender were restricted to review of the agreements. I verily believe that Mr Muturi’s claim for copyright is un-merited,” says Lufthansa in court documents.

Mr Goa has backed Lufthansa’s claim, arguing that Muturi Mwangi & Company Advocates only suggested amendments to the agreement terms, which were added to the final draft.

“There were several meetings held between myself, KAA and Lufthansa on amendments. Mr Muturi did not participate in these meetings. The agreements were signed by KAA and Lufthansa on May 8, in my presence but in Mr Muturi’s absence,” he adds.

Lufthansa paid Mr Goa $75,000 (Sh6.7 million) for his contribution to the document.

Lufthansa had initially offered Mr Muturi $10,000 (Sh900,000) as legal fees, which the lawyer refused to take, sparking the dispute that has since evolved into a heated legal battle.

At a meeting with Mr Wamae, Mr Gathinji and Njogu Kariithi, Mr Muturi agreed to suspend his demand for payment until all members of the consortium had met to discuss the matter.

“Mr Gathinji sent an e-mail to me on and behalf of LSG Sky Chefs Limited in which he instructed me to suspend all the work I was doing until the issue of my fees was amicably resolved,” he says.

The lawyer then asked Lufthansa not to use the work he had authored until his dues were settled.

Mr Muturi holds that he also provided advisory services for the procurement of a work visa and entry documents for a Mr George Mathew, who was to be appointed project manager.

The lawyer also claims he incorporated Sky Chefa, a subsidiary owned by Lufthansa, specifically for the inflight catering deal.

He wrote to the German airline in March, last year, offering to accept a one-off payment of $4.8 million (Sh432 million), but the German airline did not take up his offer.

Letting the project continue, Mr Muturi adds, will set a bad precedent that will cost service providers loss.

“If left unchecked, Lufthansa’s fraudulent misappropriation of my work will encourage consumers of legal services to use the work product of professional service providers without recourse to them,” he adds.

Apatana’s NAS Servair currently serves about 11,000 in-flight meals per day, over half of it to Kenya Airways, the national carrier. The entry of a second caterer is expected to impact on the quality of service and price of food served.

The Lufthansa-led joint venture will pay KAA a graduated concession fee based on their annual sales as well as a standard rental fee for the land that the kitchen will occupy.