Economy

Taxpayers to pay Sh4bn for botched abattoir deal

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Auditor General Nancy Gathungu. PHOTO | LUCY WANJIRU | NMG

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Summary

  • Auditor-General Nancy Gathungu said the State Department of Livestock faces the bill following a 1986 suit after the government took over the abattoir Halal Meat Products Limited in Ngong without compensation.
  • The State had intended to expand the facility and even provide additional land and a Sh27 million loan towards the project.
  • Halal Meat Products sued the Ministry of Agriculture over the takeover and demanded compensation for lost profits.

Taxpayers are set to foot a Sh4 billion compensation claim by a private meat firm for breach of contract for its abattoir taken over by the government.

Auditor-General Nancy Gathungu said the State Department of Livestock faces the bill following a 1986 suit after the government took over the abattoir Halal Meat Products Limited in Ngong without compensation.

The State had intended to expand the facility and even provide additional land and a Sh27 million loan towards the project.

Halal Meat Products sued the Ministry of Agriculture over the takeover and demanded compensation for lost profits.

By 1996, the government had not handed the facility back to Halal Meat Products. All that time the facility remained guarded by officers from the General Service Unit (GSU).

On October 7, 2005 High Court judge Jeanne Gacheche ruled that the government had commited an offence by taking over the abattoir during the 1984 drought then refusing to buy it or restore it to its original state.

She awarded Halal Meat Products Sh1.8 billion, but ordered that the Sh27 million loan owed by the firm be deducted from the award.

The government's attempt to block the award flopped in 2016 after the Appellate Court upheld Justice Gacheche's order.

In December 2018, Halal Meat Products sought to have the Livestock Principal Secretary jailed for allegedly stalling release of the award, which is now Sh5.242 billion due to an annual 12 per cent interest.

Meanwhile , in a qualified audit dated November 11, 2020, Ms Gathungu also raised the red flag over State Departments’ failure to settle Sh25 million legal bill owed to Associated Architects.

Associated Architects sued the State Department for Livestock in High Court Civil Case No 488/2013 whose accrued interest balance is Sh25 million.

Ms Gathungu said the contract agreement provided for audit review dated February 4, 2009 indicate that M/s Associated Architects was awarded a contract through direct procurement for consultancy services on construction of Mifugo House for the Ministry of Livestock Department at a contract sum of Sh84, 505, 999.99.

“However, it is not clear and no satisfactory explanation was provided on why the consultant should be paid the contract sum, yet no construction was undertaken,” She said.