Over 30 smallholder coffee societies through their marketing agency Kenya Co-operative Coffee Exporters Ltd (KCCE) have Servicoff Ltd over a Ksh59.1 million debt.
According to court documents in our possession, the Ksh59.1 million is the cost of interest that KCCE incurred after seeking bank loans to settle farmers’ proceeds after Servicoff Ltd defaulted on full payment for coffee supplied.
This writer understands that the coffee was supplied in the financial year 2013/2014, being 32,769 bags of coffee at a consideration of USD9,723,747 (Ksh1.1 billion in the current exchange rate).
Servicoff acknowledged that all the bags of coffee supplied by KCCEL met the required specifications and standard save for 1,768 bags which it rejected.
Despite collecting and selling the coffee, KCCE says that Servicoff declined to effect payment and engaged in delay tactics.
As of September 13, 2017 when the two agencies entered into a Heads of Agreement, Servicoff owed KCCE USD 1,688,853 (Ksh183 million).
“By the same Heads of Agreement, the Defendant (Servicoff), undertook to partially settle; USD 472,219.92 (Ksh51.2 million) on or before 15th November, 2017, USD 400,000 (Ksh43.4 million) on or before 15th December, 2017,” KCCE says in court documents.
“Further, the Defendant undertook to make a proposal for payment of the balance of USD 556,947.28 (Ksh60.4 million) by 19th September, 2017. Upon compliance with the foregoing, the Plaintiff agreed to waive the storage charges.”
KCCE argues that Servicoff has been reducing its indebtedness by paying meager installments, having paid only USD173,444 (Ksh18.8 million) as of February 14, 2020.
KCCEL says it was thus forced to take a loan of USD2,921,918 (Ksh316.7 million) on March 23, 2015 to pay farmers. The loan was to be paid in two equal installments, but due to non-payment by Sevicoff KCCE defaulted the loan, resulting to the Ksh59.1 million interest.
They want Servicoff compelled to pay Ksh59.1 million, being the interest accrued on the term bank loan it drew to pay farmers. KCCE says the alternative should be for Servicoff to pay interest at the prevailing interest rate on the Ksh183 million for the time of default in December 2014 to 2018.
Servicoff is a company owned by Peter Kinyua, a son to the venerated former Managing Director of Kenya Planters Cooperative Union (KPCU) the late Henry Kinyua.
In 2019, Kinyua was on the spot over the existence of River Café in the middle of Karura Forest in Nairobi.
The café is run by Mrs Sophie Kinyua, Mr Peter Kinyua’s wife. Mr Kinyua is the current Kenya Forest Service (KFS) board chairman, hence the existence of the café as a conflict of interest and irony for a man who should be conserving the forest.
Despite the concerns that were even raised with the National Assembly Environment Committee, Mr Kinyua was awarded another term at the helm.
According to his bio, Mr Kinyua graduated from Salve Regina University in May 1986 with a Bachelor of Arts and Science Degree. He is a coffee trader by profession and has been exporting coffee for over 25 years.
He is a member of Mild Coffee Traders Association and the founder Chairman of Kenya Coffee Traders Association. He has been a Director of Coffee Board of Kenya.