Revealed: The Nyeri tycoons running JKIA's multi-billion catering unit
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In 2014 German airline Deutsche Lufthansa AG won a tender floated by the Kenya Airports Authority (KAA), which was to see the multinational set up an in-flight catering kitchen on 1,200 square feet within the Jomo Kenyatta International Airport (JKIA) in partnership with a group of local shareholders.
The move was bold, as it was about to bring to an end a monopoly that Nas Servair had enjoyed since 1949, while raking in billions for Lufthansa and its local partners.
To navigate a commercial environment largely influenced by politics, Lufthansa needed a local partner and that is how Apatana Investments, a firm bringing together a group of local investors, got into the picture.
Together they formed the JV Partners consortium, which secured a 25-year deal to build and operate the in-flight kitchen fitted with state of the art culinary equipment to prepare the most sumptuous of meals for millions of people that will board flights from JKIA in the duration of the contract.
The deal started running in 2015 when construction was completed, which means it will expire in 2040.
The deal is lucrative. JV Partners will in the 25-year period it operates the kitchen remit $411.6 million (Sh48 billion) to the KAA.
For the consortium to agree to paying Sh48 billion in concession fees alone, it means that the venture will rake in copious amounts in revenue and by extension, profits.
The KAA’s website indicates that there are at least 20 international airlines that operate from JKIA, and another seven domestic airlines.
Dozens of flights leave Kenya from JKIA each week, with only two inflight catering kitchens available. There are plenty of clients to split between Nas Servair and JV Partners, hence both outfits mint millions from the food business alone.
Being one of the largest airlines in the world, Lufthansa was always guaranteed to bring onboard airlines that would purchase the meals at top dollar, aside from pumping in capital.
Apatana Investments was to bring in some capital but also help the consortium navigate the at times challenging nature of Kenya’s commercial ecosystem, where political patronage and bureaucracy have soiled business ideas and ventures that had the potential to grow into multi-billion-shilling enterprises.
Former Mathira MP Eliud Matu Wamae has since 2014 been the face of Apatana Investments alongside Ndungu Gathinji, the chairman of stockbroking firm Francis Drummond & Company Limited.
Whenever there has been need for Apatana Investments to issue communication to the media, it has been by Mr Wamae or Mr Gathinji.
But the two are not the only Nyeri tycoons behind one of Kenya’s most unique business ventures.
Records from the Business Registration Service (BRS) show that Apatana Investments brings together some of the wealthiest and most powerful individuals from Nyeri County, most of whom have worked in the civil service at some point.
From Nyeri Senator Ephraim Mwangi Maina to former Kenya Defence Forces Chief of General Staff Julius Karangi and former Kenya Tea Development Agency (KTDA) chair Peter Kanyago, the shareholding list reads like a register of Nyeri County’s most influential businessmen.
Mary Wambui Mwai, the woman who caused a stir when it was revealed that she was former President Mwai Kibaki’s second wife, is also among the shareholders. While Mr Kibaki denied being married to her, Ms Wambui to date insists that she and the former president were a wedded couple.
Other Nyeri tycoons with shares in the company are Masinde Muliro University of Science and Technology (MMUST) Chancellor Peter Wanyaga Muthoka, Kenya’s former Ambassador to the UK Joseph Muchemi, businessman Isaac Samson Githuthu, former KAA Board member Isaac Gathungu Wanjohi, businessman Gabriel Gatheru Rwamba, prominent engineer Isaiah Wambugu Mutonyi and former judge in the International Criminal Tribunal for Rwanda Lee Gacuiga Muthoga.
The Nation could not confirm by press time whether other shareholders – former Tana Water Services Board chairman Kabuyah Muito, Anne Wakonyo Muchiri, George Muito Kingori, Joseph Kiboi Waituru, Leopold Prusensio Mureithi and Leonard Njoroge Gichuhi.
Based on the shareholding, Mr Gathinji likely calls the shots at Apatana Investments being the largest shareholder.
He owns 1,271,395 shares individually, and another 1,013,026 shares through a company – Nairobi Nominees Limited.
Mr Gathinji owns 50 shares in Nairobi Nominees Limited, while Francis Drummond & Company Limited owns the other 50 shares.
Aside from chairing Francis Drummond & Company Limited, Mr Gathinji is also the Board chairman at Development Bank of Kenya.
Mr Wamae, former KAA Board member Isaac Samson Githuthu each own 1,271,395 shares making them joint second largest shareholders.
The former MP’s brother, Mwangi Wamae, owns 1,062,807 shares. He closes the list of individuals with more than one million shares in Apatana Investments.
Mr Karangi is the National Social Security Fund (NSSF) Board chair, and holds 497,051 alongside his wife Mary Njeri.
He was the first Chief of General Staff at the KDF under the new Constitution. Before joining the NSSF Board, Mr Karangi was the KAA Board chair.
He was appointed to the KAA in 2016, two years after Apatana Investments and Lufthansa bagged their concession deal at JKIA. It is still unclear whether he was a shareholder at the time of his appointment to the KAA Board.
The Lufthana and Apatana Consortium is currently fighting off efforts by lawyer Eliab Muturi Mwangi to charge Sh1.2 billion in legal fees for his work in drawing up the concession agreements and other documents.
In 2014 Mr Muturi filed an application before the High Court deputy registrar seeking to be allowed to charge the fees.
He claimed to have been instrumental in preparing the documents signed by Lufthansa and the KAA, and wanted the deputy registrar to determine that the value of the contract was close to Sh50 billion, based on the concession fees, construction and operation agreement fees and leasing costs.
Under Kenyan law, disputes over legal fees are first settled by the deputy registrar of the court before being escalated to a judge in the form of an appeal. In such matters, the deputy registrar is also referred to as the taxing master.
Lufthansa argued that the documents were largely prepared by the KAA’s lawyers, hence Mr Muturi could not claim to have done work worth Sh1.2 billion.
The deputy registrar eventually ruled that Mr Muturi was only eligible for Sh10 million.
Mr Muturi appealed at the High Court but Justice Mary Kasango dismissed his claim in April, 2020.
“In this case from the reproduction of the taxing master’s ruling it becomes clear that the taxing master had in mind the transaction that engaged the advocate and the value of the agreement. Bearing that in mind the taxing master exercised her sound discretion and awarded Sh10 million as instructions fees. That discretion, as the reproduced Ruling shows, that it was “specified cogent” and with conviction. I do not find a basis of interfering with that exercise of discretion in the award of instruction fees,” Justice Kasango said in her ruling.
The lawyer also filed a civil suit 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 consider that based on the value of the contract, Mr Muturi should be paid Sh1.2 billion for the legal work.
But Lufthansa’s lawyer Cecil Kuyo holds that Mr Muturi was only hired to review documents that were already prepared, and possibly give any necessary input.
The KAA lawyer, Michael Goa, was paid Sh6.7 million as per documents filed in court. BY DAILY NATION
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