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On October 7, 2005 High Court judge JeanneGacheche ruled that the government haddone wrong by taking over the abattoir.

She awarded Halal Meat Products Sh1.8

billion, but ordered that the Sh27 million

loan owed by the firm be deducted from the

award.

It has since been a cat-and-mouse game

between the Mothas and government.

Sh6bn meat factory scandalreturns to haunt KenyantaxpayersMONDAY FEBRUARY 11 2019

The defunct Halal Meat Products Limited slaughterhouse in Ngong, Kajiado County, in a picture taken last

Wednesday, February 6, 2019. PHOTO | EVANS HABIL | NATION MEDIA GROUP

By BRIAN WASUNA More by this Author

One of Kenya’s forgotten scandals, the 45-year-oldHalal abattoir in Ngong, has resurfaced, and thetaxpayer will, once again, shoulder the Sh5.7 billionburden of the private meat venture that went terriblywrong in the 1970s.

It has emerged from court proceedings that theNational Treasury could be planning to pay out thecash for the botched project that has become a casestudy of all that could possibly go wrong with public-private partnerships.

TWISTS

In this case, the government provided land for the project and a loan towards its development, buthas now been slapped with the massive bill.

At the High Court in Nairobi, tycoon Mohammed Ali Motha is fighting Mr Ramadhan Juma Ali, aman claiming to be his son, and who insists on getting a slice of the anticipated Sh5.7 billion payoutfrom the government.

The pair has every reason to be confident about the payout after Livestock Principal Secretary HarryKimtai told a court in December last year that the payment had been approved.

Halal Meat Products had asked the High Court to jail Mr Kimtai, arguing that he had stalled therelease of their award. Replying, Mr Kimtai blamed the Treasury for delaying release of the funds,saying, the Agriculture and Livestock ministry had already approved the release of the funds to Halal.

It is a story of twists and turns, exposing government lethargy, bureaucracy, ineptitude and high-handedness.

The saga is traceable back to the meat shortage of 1972 in Nairobi, when the Agriculture ministryallowed the construction of privately-owned slaughterhouses in several towns across the country tocompete with the Kenya Meat Commission. Within no time, there was an influx of meat, which raisednew concerns over its fitness for consumption.

To address the concerns, the Agriculture ministry ordered that any vehicle transporting meatproducts should have a red stripe, with the word “meat” in white, a rule that stands to-date.

City Hall had also floated the idea of having a meat inspection facility on the city’s outskirts. The ideawas to have all meat products destined to Nairobi inspected at the facility before being released intothe market.

Automatically, Ngong was floated as a suitable location. After all, most meat coming into Nairobi atthe time was from the nearby Ongata Rongai and Waithaka village.

BLOCKED

That is how meat tycoon Mohammed Ali Motha and his business partner Abdul Habib Adam cameinto the picture. Mr Adam owned the Adam’s Arcade shopping centre on Nairobi’s Ngong Road,which he had founded in 1954, to serve the white community. Mr Motha was running a butcherythere.

Thus, in 1973, Mr Motha and Mr Adam approached the government for assistance in getting a loanfrom the East African Development Bank, saying, he had some land in Ngong on which he wanted toput up a slaughterhouse.

The abattoir, he argued, would double up as an inspection unit, hence solve the City Hall’s puzzle andensure Nairobi residents ate certified meat, akin to the standards applicable at the Kenya MeatCommission (KMC).

Word went around that Mr Motha intended to buy 60 acres of land in Ngong to expand his businessempire. This irked the El-Kejuado County Council where Ngong town fell, and it blocked thebusinessman's plan for a slaughterhouse and inspection unit.

But in 1974, Mr Jeremiah Nyagah, the then Agriculture minister, gave the two entrepreneurs thegreen light to set up an abattoir and inspection unit at a cost of Sh9.6 million.

By then, the ministry had £500,000, which the Danish International Development Agency (Danida)had given for a project, but which had failed to materialise. This money was redirected to the abattoirproject — as a government-guaranteed loan. Parliament was later told that this was a scandal.

In a series of mistakes that would haunt the government later on, the two businessmen were allowedto use their Halal Meat Products Ltd as the vehicle for the project, with the government having noshareholding in it.

FOUR YEARS

The company had been incorporated on December 20, 1972 with Mr Adam, Mr Motha and his wifeFatuma Tunny Motha as its directors.

Mr Motha had expressed interest in meat export especially to the Middle East and part of his strategywas to use the name “Halal” to attract the unique, predominantly Islamic market.

But on March 4, 1974, Mr Adam died at the Nairobi Hospital. Mr Motha’s wife, Fatuma, bought hisstake in Halal Meat Products and the project preparations proceeded.

Land was now the only challenge, but the ministry agreed to help the company acquire some inNgong.

But a standoff ensued in August 1974 when Commissioner of Lands James O’Loughlin asked theDepartment of Veterinary Sciences to surrender 20 acres for the project.

Veterinary Sciences argued that some of the diseases it was studying could cross over to the abattoirand affect cattle before they were slaughtered. After the department refused to surrender land. MrO’Loughlin threatened to initiate government sanctions against it.

Veterinary Sciences then proposed to surrender six acres. This was not enough, and Mr O’Loughlindemanded that the acreage be doubled. The Commissioner of Lands wanted more land so that abuffer zone could be created to reduce the risk of infection of the animals. Eventually VeterinaryServices agreed to give 10 acres. It later gave another 1.5 acres to allow sewerage construction.

Within two weeks, a title deed had been processed for Mr Motha and Mr Adam. This was curiousconsidering the laborious process usually took months.

The Agriculture ministry then released Sh27.701 million loan to Halal Meat Products Limited.

The company hit the ground running and hired Inter-Africa Construction Company to put up theabattoir.

Construction started towards the end of 1974 and took four years. Equipment worth Sh11.34 millionwas shipped into Kenya from Denmark, tax-free, on the assumption that it was the governmentimporting and not a private company.

STAKEHOLDERS

After completion, Halal Meat Products marketing manager Wilfred Matheri claimed that the facilitycost a total Sh50 million, and that government loaned it Sh27 million.

So, who owned Halal Meat Products abattoir?

In his 1977-1978 report, the Auditor General D.G. Njoroge questioned the government loanarrangement with Halal Meat Products as it appeared to be to the abattoir owners' advantage.Interest on the loan, which was meant to be repaid from 1977, had not been remitted one year later.

The Auditor-General’s query sparked fireworks that would see even more questions raised on theabattoir project.

The abattoir was at this point complete and had the capacity to slaughter 1,200 animals per day. Italso had three large chillers and three deep freezing rooms.

But the controversy surrounding it made it difficult to start operations in earnest. The Auditor-General painted a picture of a private company tricking the government into financing a project thatwould end up cannibalising KMC.

The Mothas refused to let KMC have a board member at Halal Meat Products, fuelling a war. More sobecause the Halal abattoir intended to export meat, which, at the time,was a role reserved for theKMC

Feeling the heat from the public outrage and Parliament, which was raising questions from theAuditor General’s report, Agriculture minister Jeremiah Nyagah opted to go to war with Mr Motha.

Mr Nyagah had just recovered from a maize scandal and the Halal project was threatening to sinkhim. Mr Nyagah demanded to know all Halal Meat Products stakeholders and how much the firmhad injected into the abattoir.

In late 1978, the minister visited the abattoir with the Permanent Secretary S.D. Gathiuni and otherofficials. Some mid-level officials had visited the plant earlier incognito.

LICENCE

They found that the plant was operational and some Department of Veterinary Science employeeswere working there, too. It appeared that the government was now paying employees at a privately-owned abattoir, which was funded by taxpayers.

Several workers at the facility were former KMC employees. Mr Nyagah wondered why KMC staff hadleft pensionable government jobs for a private company, whose function and future was not yetdefined. To the minister, this showed the hand of government officials working behind the scenes ofthe Halal abattoir.

The minister believed that former KMC managers were clandestinely using Halal Meat Products tohijack the multimillion meat export business.

In 1979, Mr Nyagah decided to deny Halal Meat Products an export licence.

Then former KMC boss Richard Douglas, who had a thriving butchery in Karen, expressed interest injoining the meat export industry. The former KMC commissioner had his eye on the state-of-the-artNgong abattoir.

As Mr Nyagah planned to take over the facility and to second meat inspectors from Kajiado District torun it, he was moved from the Agriculture to the Environment ministry. The Halal project closed, too.After all it had no export licence.

It was in 1984 that Tourism minister Maina Wanjigi started to push for the reopening of the abattoir,but to process game meat and export it.

COMPENSATION

The KMC was at this time struggling to process meat as several animals were dying before beingslaughtered. At KMC’s Athi River abattoir, nearly 40 animals would die from starvation each day. Thecattle had been presented to KMC after several days of travel.

The Halal debate was reignited during the June 12, 1984 Kanu Parliamentary Group meeting, whenPresident Daniel arap Moi issued a directive to Agriculture minister William Omamo to reopen theabattoir.

Mr Omamo complied, and the abattoir was reopened towards the end of August 1984 as a subsidiaryof the KMC. That is the mistake the taxpayer is paying for.

The government expressed interest to buy out the Mothas from the abattoir, but a deal could not bereached. The Mothas sued government through Halal Meat Products in 1986, but even then an out-of-court settlement was still being pursued.

In June 1988, the government wrote to the Mothas, saying, it was no longer interested in buying theabattoir, and that it would hand them back the facility. By this time, the abattoir was not sustainableas many livestock farmers were also hoarding animals.

The Mothas decided to sue the government and demand compensation for lost profits. In response,the government denied owing the Mothas anything, and argued that the couple owed taxpayers Sh27million — the loan that was yet to be repaid.

In 1989, High Court Judge Abdul Rauf ordered that the Mothas pay the Sh27 million they owed thetaxpayers.

SH1.8 BILLION

Attempts to settle out of court failed, as the parties could not agree on valuation of the abattoir. By1996, government had not handed the facility back to Halal Meat Products and it was guarded byofficers from the General Service Unit (GSU).

On October 7, 2005 High Court judge Jeanne Gacheche ruled that the government had done wrongby taking over the abattoir during the 1984 drought then refusing to buy it or restore it to its originalstate.

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

Government’s 2016 challenge of the award flopped at the Appellate Court, which upheld JusticeGacheche’s order.

It has since been a cat-and-mouse game between the Mothas and government. Last December, theysought to have the Livestock PS jailed for allegedly stalling release of their award, which is now Sh5.7billion due to an annual 12 per cent interest.