Jan 27, 2023

Mawazo Writing Africa

Writing about the main

Revealed: The Nyeri tycoons running JKIA’s multi-billion catering unit

In 2014, German airline Deutsche Lufthansa AG won a tender from the Kenya Airports Authority (KAA) to provide the multinational with a 1,200 square foot galley at Jomo Kenyatta International Airport (JKIA), in partnership with a group of local shareholders.

Read: Kenya Airways employees face tougher fines under new policy

The move was bold as it was on the verge of ending a monopoly Nas Servair had held since 1949, while raking in billions for Lufthansa and its local partners.

To navigate a highly politically influenced commercial environment, Lufthansa needed a local partner . And that’s how Apatana Investments, a firm bringing together a group of local investors, came into the picture.

Together they formed the consortium JV Partners, which inked a 25-year deal to build and operate the company -Flight Kitchen , which would be equipped with state-of-the-art culinary equipment to prepare the most sumptuous meals for millions of people on JKIA’s flights for the duration of the contract.

The deal was operational in 2015 when construction was completed, which means it expires in 2040.

The deal is lucrative. JV Partners would transfer US$411.6 million (Sh48 billion) to the KAA over the 25 years that the kitchen will operate. If the consortium agrees to pay Sh48 billion in concession fees, that means that the company would reap large amounts of revenue and ultimately profits.

The KAA website states that at least 20 international airlines operate from JKIA, along with seven domestic airlines.

Dozens of flights depart Kenya from JKIA, served by just two onboard catering kitchens. There are many customers that can be split between Nas Servair and JV Partners, hence both companies make millions in the grocery business alone.

As one of the largest airlines in the world, Lufthansa was sure airlines would pay top dollar for meals, alongside pumping in capital.

Read: Personal property confiscations at JKIA in war on tax evaders

Apatana Investments should bring in some capital, but also help the consortium navigate Kenya’s often challenging trading ecosystem, where political patronage and bureaucracy have killed business ideas and ventures that had the potential to grow into multi-billion shilling companies.

Alumni MP Mathira Eliud Matu Wamae has been the face of Apatana Investments since 2014, along with Ndung’u Gathinji, chairman of the stockbroker of Francis Drummond & Company Limited.

Whenever Apatana Investments has attempted to brief the media, it has always been Mr. Wamae or Mr. Gathinji.

But the two are no t those only Nyeri tycoons behind one of Kenya’s most unique business ventures.

Business Registration Service (BRS) records show that Apatana Investments brings together some of Nyeri County’s wealthiest and most powerful individuals, most of them at any point in the

From Nyeri Senator Ephraim Mwangi Maina to former Chief of Staff of the Kenya Defense Forces Julius Karangi and former Kenya Tea Development Agency (KTDA) Chairman Peter Kanyago, the stake The List reads like a directory of Nyeri County’s most influential businessmen.

Ms Mary Wambui Mwai, the woman who caused a stir when it was claimed that she was the z wife of former President Mwai Kibaki, is also a shareholder. While Mr. Kibaki denied being married to her, Ms. Wambui to this day insists that she is Kibaki’s widow.

Other Nyeri tycoons with shares in the company include the Chancellor of Masinde Muliro University of Science and Technology (MMUST), Peter Wanyaga Muthoka, Kenya’s former Ambassador to the United Kingdom Joseph Muchemi, businessman Isaac Samson Githuthu, former KAA board member Isaac Gathungu Wanjohi, businessman Gabriel Gatheru Rwamba, prominent engineer Isaiah Wambugu Mutonyi and former International Criminal Tribunal for Rwanda judge Lee Gacuiga Muthoga.

< p>Other shareholders, some from other parts of central Kenya, include former CEO of Tana Water Services, Kabuyah Muito, Anne Wakonyo Muchiri, George Muito King’ori, Joseph Kiboi Waituru, Leopold Prusensio Mureithi and Leonard Njoroge Gichuhi.

< p>Based on the holding, Mr. Gathinji likely owns Apatana Investm ents, the largest shareholder.

He owns 1,271,395 shares individually and another 1,013,026 shares in total gh a company – Nairobi Nominees Limited.

Mr Gathinji owns 50 shares in Nairobi Nominees Limited while Francis Drummond & Company Limited owns the other 50 shares.

In addition to being Chairman of Francis Drummond & Company Limited, Mr. Gathinji is also Chairman of the Board of Development Bank of Kenya.

Mr. Wamae and former KAA board member Isaac Samson Githuthu each own 1,271,395 shares, making them the second largest shareholders.

Former MP’s brother Mwangi Wamae owns 1,062,807 shares.

He completes the list of individuals with more than one million shares in Apatana Investments.

Mr. Karangi is the National Board Chairman of the Social Security Fund (NSSF) and together with his wife Mary Njeri hold 497,051 shares.

He was the first chief of staff of the KDF under the new n constitution. Prior to joining the NSSF Board, Mr. Karangi served as Chairman of the KAA Board since his appointment in 2016.

The Lufthansa and Apatana Consortium is currently opposing the efforts of attorney Eliab Muturi Mwangi, legal fees of Sh1.2 billion for his work in drafting the concession contracts and other documents.

In 2014, Mr Muturi made an application to the High Court’s Deputy Registrar to collect the fees

He claimed to have been instrumental in the preparation of the documents signed by Lufthansa and KAA and wanted the Deputy Registrar to establish that the contract value was based on concession fees, construction and operating contract fees and the leasing cost was nearly Sh50 billion.

Under Kenyan law, disputes over legal fees are initially settled by the Assistant Clerk of the Court, b before being referred to a judge in the form of an appeal. In such matters, the deputy registrar is also referred to as the tax master.

Lufthansa argued that the documents were largely drawn up by KAA’s lawyers, which is why Mr Muturi could not claim a job worth 1.2Sh billions.

The Deputy Registrar eventually ruled that Mr Muturi was only entitled to 10 million shillings.

Mr Muturi appealed to the High Court but Judge Mary Kasango dismissed dismissed his lawsuit in April 2020.

Read: State tries to reclaim 238 million shillings confiscated from JKIA

“In this case, the reproduction of the tax ruling, it was clear that the tax master had the transaction in mind, which hired the attorney, and the value of the arrangement. In view of this, the tax master exercised her good judgment and awarded Sh10 million as instruction fees. As the judgment reproduced shows, this scope for discretion was stated “validly” and with conviction. I see no reason to interfere with this exercise of discretion in awarding tuition fees,” Justice Kasango said in her ruling.

The solicitor also brought a civil complaint in the High Court, seeking Sh1.2 billion. The case is still pending before the High Court.

His lawyer, Senior Counsel Wilfred Nderitu, wants the High Court to rule that Mr Muturi should be paid Sh1.2 billion based on the value of the contract the legal work.

But Lufthansa lawyer Cecil Kuyo is of the opinion that Mr. Muturi was only hired to check already prepared documents and to provide possibly necessary input.

KAA- Lawyer Michael Goa was paid Sh6.7 million according to documents filed with the court.