Supreme Court quashes Sh5.8 billion grain facility deal, dealing major setback to Cabinet Secretary Hassan Joho’s family business interests at Mombasa Port
The Supreme Court has delivered a crushing blow to Cabinet Secretary Hassan Joho’s family business empire, nullifying a lucrative Sh5.8 billion grain handling facility deal at Mombasa Port in a landmark ruling that effectively preserves Mohamed Jaffer’s three-decade monopoly in the sector.
In a significant victory for activist Okiya Omtatah and indirectly for business tycoon Mohamed Jaffer, the apex court ruled that the Kenya Ports Authority (KPA) violated constitutional procurement procedures when it awarded the contract to Portside Freight Terminals Limited, a company linked to the Joho family.
Constitutional Violation Cited
A five-judge bench led by Deputy Chief Justice Philomena Mwilu declared that KPA’s use of the Specially Permitted Procurement Procedure (SPPP) to award the licence was “inconsistent with the Constitution,” emphasizing that all public projects must follow fair, equitable, transparent, competitive and cost-effective processes.
“The protection of the supremacy of the Constitution is critical and there can be no greater public or national security interest than upholding the Constitution, its values and principles and obeying the law,” the justices stated in their unanimous decision.
The court found that KPA had failed to demonstrate “exceptional circumstances” that would justify bypassing competitive tendering, a requirement under Section 114A of the Public Procurement and Asset Disposal Act.
Omtatah’s Persistent Legal Challenge
Senator Okiya Omtatah, who has been challenging the Joho family’s port business dealings since 2022, argued that the procurement process was discriminatory and that other companies were unfairly excluded from consideration. His legal activism has now culminated in this major victory against what he termed an irregular procurement process.
The Busia Senator’s persistence in demanding transparency began in May 2022 when he sued KPA for refusing to provide copies of licenses issued to Portside Freight Terminals Ltd and Heartland Terminals Ltd. He had argued that the secrecy surrounding the deal violated his constitutional right to access information on matters of significant public interest.
Business Rivalry and Port Politics
The Supreme Court ruling has significant implications for the ongoing business rivalry between the Joho family and Mohamed Jaffer, whose company Bulkstream Ltd (formerly Grain Bulk Handlers Limited) has operated the sole bulk grain facility at Mombasa Port for over 30 years.
The government had argued that the second facility was necessary to end Jaffer’s monopoly and enhance food security through diversification.
However, the court’s decision effectively maintains the status quo, preserving Jaffer’s dominant position in the grain handling business.
The rivalry between the two business interests has spilled over into the courts in multiple ways. In ongoing defamation proceedings, Abubakar Ali Joho (Abu), brother to CS Hassan Joho, has accused Jaffer of orchestrating a smear campaign against his family following their entry into the port logistics business.
“He has had a monopoly for 30 years. Now that I have entered the port business, that’s where our troubles began. He is the monopoly; I am not,” Abu Joho testified in court, directly naming Jaffer as being behind attacks on his family’s reputation.
Financial and Strategic Implications
The blocked project, estimated to cost approximately $45 million (Sh5.8 billion), would have seen Portside Freight Terminals construct a second bulk grain handling facility with a common user island berth. The facility was expected to complement the existing capacity of 2.4 million tonnes annually at the port.
KPA had argued that Portside Freight Terminals offered strategic advantages, including ownership of adjacent land and willingness to build the berth at its own cost. However, these commercial considerations were deemed insufficient to override constitutional procurement requirements.
Broader Context of Joho Business Empire
The Supreme Court decision represents the latest setback for the Joho family’s expanding business interests. The family has faced multiple legal challenges across various sectors, from port operations to real estate deals, including a recent Sh9 billion land deal connected to the Talanta Stadium project.
The ruling also comes amid ongoing defamation cases where the family has been accused of various improprieties, including allegations of defrauding Mombasa County of over Sh40 billion during Hassan Joho’s tenure as governor – claims the family vehemently denies.
Legal Precedent and Future Implications
The Supreme Court’s decision sets an important precedent for public procurement, emphasizing that no project, regardless of its perceived strategic importance or urgency, can circumvent constitutional requirements for competitive tendering.
The court overturned a Court of Appeal ruling that had initially cleared the way for the project, stating that the appellate judges had erred in reversing the High Court’s original decision blocking the deal.
Legal experts view the ruling as a vindication of constitutional procurement principles and a warning to public entities against misusing alternative procurement methods to avoid competition.
What’s Next
With the Supreme Court ruling being final, Portside Freight Terminals Limited will be unable to proceed with the grain facility project under the current arrangement. Any future attempts to establish a second bulk grain handling facility at Mombasa Port will need to follow proper competitive tendering procedures.
For Mohamed Jaffer’s Bulkstream Ltd, the ruling preserves their exclusive position in grain handling at Kenya’s largest port, maintaining a business arrangement that has lasted over three decades.
The decision also validates Omtatah’s role as a key figure in ensuring government accountability and transparency in public procurement processes, adding to his reputation as a formidable legal activist willing to challenge powerful business and political interests.
