Political elite to blame for union’s fall


The Kenya Planters Cooperative Union went under after it lost money to a well-connected political elite.

The union gave huge loans meant to help small-scale farmers to large estates, and part of the money was not even used for coffee- related business, the Nation can reveal.

Those who got the money had no intention of paying back, and consequently KPCU had no money to pay farmers, leading to the perennial delays in paying farmers the 1989 dues.

The man at the helm of the KPCU, Mr Gitonga Chabari, even wanted the union’s board to lie to President Daniel arap Moi about payments to farmers, according to an inquiry committee on coffee formed on April 5, 1990.

The committee, led by Farmchen Limited managing director Stephen Mulinge, says in a preliminary report that Mr Chabari had blamed the coffee board for failing to remit money for onward transmission to farmers.

According to the committee, between October 1, 1989, and May 23, 1990, the coffee board had paid KPCU Sh1.45 billion, including Sh708.9 million for the 1988/1989 payments.

The KPCU was then supposed to advance loans against expected coffee deliveries and the cash flow of applicants.

The money did not, however, land in the hands of those who deserved it and cooperatives that were the only ones paying back the loans got only Sh8.5 million out of the Sh588 million loaned out.

Twenty debtors owed Sh407 million, out of which seven, all major estates, received Sh260 million.

Former Cabinet Minister Mbiyu Koinange’s Closeburn and Ehothia received Sh60 million while Mr J.K. Mbugua’s four estates got a total of Sh47 million.

Mr P. Nganga’s Kinyora Estate got Sh45 million while former Cabinet Njenga Karume’s Cianda, Green Gate and Twiga estates got Sh40 million.

Minor estates collected Sh167.5 million. Save for the cooperatives, most of the debtors did not pay back and crop deliveries did not match interest payments.

A total of Sh71.2 million was tied up in dormant accounts which KPCU proposed to write off, while Sh5.07 million was advanced for other purposes.

Mr Ratemo Onchere got a total of Sh480,000 to buy a farm, while Waguthu Investments was given Sh1.5 million for a bank overdraft. Mr J. Mbugua and Ms Hannah Mbugua got Sh20,000 to pay a hospital bill.

“No satisfactory explanation has been given to the committee as to why these large sums owed to farmers should be treated this way, particularly in light of the fact that no attempts have been made to recover them,” the Brief to the preliminary findings reads.

Consequently KPCU was broke and continued to delay farmer’s payments.