Fights erupt over multi-billion machinery shipped to Uganda

A Kenyan-based agro-processing company, RM Estates Ltd, is struggling to recover a set of farm machinery it alleges were unscrupulously shipped into Uganda to establish a multi-billion agro-processing company. 
RM Estates Ltd accuses the proprietors of Terra Agri Farms East Africa Ltd of acting without the knowledge and consent of its owners. The companies engage in the growing, harvesting, storing, agro-packaging, agro-processing, and marketing of all seasonal cereals and food crops such as rice, bananas, mangoes, and maize. 

“The machinery has never been recovered to date. It remains within the possession of Terra Agri Farms East Africa Ltd in Uganda,” Mr Charles Mayiga of G&A Advocates, the Kenyan law firm representing RM Estates Ltd, told Saturday Monitor.

Saturday Monitor understands a robbery case earlier reported to Eldoret Central Police Station was later moved to the Regional Criminal Investigation Office in Nakuru. Among the equipment and machinery allegedly converted and transferred to Uganda—captured in 41 bills of lading that this publication saw—includes a Denis Seed Cleaner, Disc Harrows and Caffeni Sprayer. 
Others are used wheel tractors - MCCORMICK, used agricultural tractor, used Agricultural Tatu wheat planter and used portable welding equipment. 
There were also used John Deere combine harvesters, among other heavy-duty machines. 

Things fall apart
In December 2017, Mr Rajiv Ramesh Patel and his cousin Himesh Patel Rajeni—opened RM Estates Ltd. The pair had a shareholding of 50 percent apiece and acted as co-directors. Yet Mr Rajiv now accuses Mr Himesh of breaching a fiduciary duty owed to RM Estates as a director. This, the latter is accused of doing by concealing company records and transactions from the former.
 
Mr Himesh is accused of removing RM Estates’ assets, which are subject to debentures. A debenture is a long-term security yielding a fixed rate of interest.

Despite the assets (machinery) being subject to a Kshs75m (Shs2b) floating and fixed debenture by I&M Bank Limited, Mr Himesh also allegedly converted RM Estates’ assets to Terra Agri Farms East Africa Ltd, without the consent of the co-director and the lender bank. 
Upon converting and shipping the equipment to Uganda, Mr Himesh is said to have obtained Yellow Comesa Insurance Cards to export the machinery to Uganda despite the company having no business in Uganda. He also reportedly charged the freight and clearing bills on RM Estates Ltd. 

Documents from Eldoret High Court show that RM Estates and I&M Bank (Kenya) signed the debenture agreement on September 12, 2018. The two parties forthwith committed to a debenture constituting a security equivalent to Kshs75m. Per the agreement, RM Estates was not to create or attempt to create or permit to subsist any debenture mortgage pledge.  
The debenture also outlawed the company from disposing of or alienating any part of the property and assets charged under it without the written consent of the bank.  

“I wrote directly to Mr Himesh countless times seeking company records. This was following multiple transactions made by him on behalf of the company with no reference to me,” Mr Rajiv told Saturday Monitor, adding, “[Attempts] to seek the company’s records from the employees to enable us to conduct an internal audit and reconcile our books were futile.” 

Leakages
Mr Amit Kumar Thakorbhai and Ms Irene Rotich, both employees at the firm, asked Mr Rajiv—in responses served on December 15, 2021, and January 6, 2022—to give them 14 days to respond to his request. That’s the last he reportedly heard from them.  

Mr Rajiv argued that the company had made huge losses over the years resulting from mismanagement, theft, improper record keeping, fraud and non-attendance to work of certain staff under Mr Himesh’s watch. For instance,  he cited a case there Mr Himesh reportedly directed Redlark General Holdings Limited to pay Kshs8m (Shs233m) on April 14, 2022. 

In some of Mr Himesh’s official memos leaked to this publication, he wrote to Mr Swaleh Taib, an official of Redlark General Holdings Ltd on April 1 and April 4, 2022. In the memos, he gave authorisation to Redlark to pay two third-party companies Kshs24.857m (Shs724m). 

“I, Himesh Patel, being the director of RM Estates Ltd, hereby direct and authorise Redlark General Holdings Ltd to pay the amount of Ksh8m owed to me in respect of your recent purchases directly to our supplier Kenagro Suppliers Ltd,” he wrote.  
Mr Himesh and his counterpart, Mr Rajeni Patel—the company’s chief executive officer—also allegedly engaged Waziri Amollo & Co to represent RM Estates without board consent.  

According to one of the court files, on August 3, 2022, Mr Rajiv wrote to Mr Himesh demanding an immediate reconciliation of Ksh55m (Shs1.6b) transferred from RM Estates’ accounts to RM Patel & Partners Ltd account without the board’s approval and justification. 

Mr Rajiv demanded, among others, lease records for farms leased by the company acreages, payment vouchers for rent paid, fuel records, ground spray records, air spray records, chemical stock ledgers, fertiliser stock ledgers, wheat seed stock records and the accounting details for the same. 

Red flags
It was in 2022 that Mr Rajiv Ramesh Patel established and informed RM Estates’ financiers of a deadlocked board. This culminated in the freezing of the company’s accounts and the court case at Eldoret High Court. The court application also sought an audit of the company’s books given that its assets, which were used to secure financing from I&M, were allegedly exported by Mr Himesh to Uganda without the lender’s knowledge. Mr Himesh is said to own and run Terra Agri East Africa Ltd in Uganda.  

“It is clear that there is a massive commingling of the company’s assets and only access to the company’s records for a complete audit of the same can reconcile the company’s position,” Mr Rajiv stated in the application, adding, “I am aware that some of the properties which have been removed from jurisdiction are subject to floating and fixed debentures and hence ought not to have been removed from jurisdiction without informing the lender banks.” 

He proceeded to state thus: “It is in the interest of justice that I or my agents be granted access to the company records as the 1st respondent has deliberately frustrated my quest for the same despite my position as co-director and shareholder.” 

He added: “…and all parties involved that an independent auditor be appointed to investigate the affairs of the company to ascertain its true financial and legal position for its effective running.”  
The court granted an order to allow an audit into the company, including access to financial records. 

“The 1st respondent (Himesh) has further unilaterally sanctioned transactions on behalf of the company without reference to the applicant (Rajiv), some of the said transactions amount to commingling of assets and transfer of assets beyond Kenyan borders despite their existing a debenture registered against the company’s assets. It is just that this honourable court grants the order sought here,” the court ruled. 

Terra Agri responds

Terra Agri Farms East Africa Ltd is jointly owned by Mr Himesh, 43; Jayesh Patel Rajeni, 40;  and Mr Rajeni Patel—the aforesaid pair’s 76-year-old biological father. This is per records Saturday Monitor accessed from Uganda Registration Services Bureau (URSB).
On October 14, 2019, the company registered with URSB. That same day, the father and sons trio registered Terra Agri Solutions Ltd as a sister company to Terra Agri Farms East Africa Ltd. 

Terra Agri Solutions Ltd recently came to the limelight when it emerged among the three private companies to implement an ambiguous Parish-to-Market Model Programme that was launched by President Museveni in February 2023. It, however, quickly flopped due to land acquisition irregularities. 

Under the programme, three private companies (Agromax Ltd, Terra-Agri-Solutions Ltd and AK-Purongo Ltd) in a joint venture public-private-community partnerships with land owners, will receive grants and interest-free loans (from the government) to develop and manage community-owned land. 

According to the programme document, Terra-Agri Solutions Ltd, for example, secured an estimated 56,000 acres; 26,000 acres belonging to a clan in Madiopei Sub-county, Lamwo District, and another 20,000 acres in Padibe Sub-county, Okol Parish, and 10,000 acres at Agoro Sub-county. 
Attempts to speak to Mr Himesh were futile as he did not respond to repeated emails sent to him over several months. However, his co-director, Mr Jayesh, in a telephone interview, denied the allegations that he illegally shipped the equipment to Uganda without the consent of RM Estates. 

“That the equipment was transferred illegally, as it is alleged, is not true. When equipment is transferred within the same country illegally, transferred without payment from one company to another, it can be corporate theft,” he said, adding, “I understand that, but, in this case, how can equipment cross an international border illegally? I have personally transferred money for all the equipment to Kenya.” 

Asked about the allegations of fraud against his company, Mr Jayesh said: “We have no fights left. We have a settlement agreement in court (Eldoret) in place with these cousins of mine. There are also a lot of police cases recorded against my cousins for theft of money which have been verified by an independent forensic auditor, PKF, Kenya.”