The Ministry of Agriculture is probing the circumstances under which Kenya Tea Development Agency (KTDA) took an Sh18.2 billion loan to pay an early bonus to farmers ahead of last year’s general election in August.
Agriculture Cabinet Secretary Mithika Linturi said he is gathering more information on what transpired when the loan was taken by the agency.
Mr Linturi said the timing and borrowing were wrong and accused the previous administration of coercing KTDA to take the loan.
“The issue of KTDA borrowing money to pay farmers at least I would say I have a bit of information on when and where the money was borrowed and who coerced KTDA to borrow, we are gathering more information on that,” said Mr Linturi.
KTDA mortgaged its shares to the tune of Sh18.2 billion to pay an early bonus to farmers ahead of the polls.
The loan was guaranteed by the KTDA Management Service- which is a subsidiary of KTDA Holdings.
KTDA normally closes its books on June 30 with the bonus payment to farmers approved in September ahead of disbursement in October.
The 2021/2022 bonus was, however, paid at the beginning of July.
Sources privy to the matter said the company officials were rushed by top State officials to pay the bonus in order to sway votes in favour of a certain presidential candidate.
“The books had not been closed and audited by the time the company paid the bonus. Officials at the KTDA were directed to borrow money for the payment of bonuses to growers in order to influence their decision during the election,” said the source.
KTDA chairman David Ichoho said there was nothing wrong with borrowing, however, he did not respond on whether the loan was meant to sway votes.
“If you do not have enough and someone else has, what will stop you from borrowing from them,” said Mr Ichoho in an interview on the sidelines of the KTDA directors conference in late December.
The money was borrowed from multiple banks that included NCBA and Standard Chartered Bank Kenya.
In July, KTDA denied media reports that it had borrowed money to pay an early bonus to its 600,000 farmers.
The disclosure on the debenture was recorded on September 2, 2022, by the registrar of companies after the company had paid the bonus.
The loan has subjected farmers to extra costs as they are paying interest on the borrowed amount through their respective factories.
For instance, farmers in Chinga tea factory in Nyeri had to pay close to Sh3 million in interest from the Sh200 million that they had received to pay an early bonus, according to the management.