A senior management overhaul has rocked Chai Trading Company, a subsidiary of the Kenya Tea Development Agency (KTDA), following allegations of procurement fraud and financial misconduct.

Consequently, KTDA has suspended several senior executives at its subsidiary, Chai Trading Company, as part of an extensive crackdown on corruption by newly appointed board.

This action follows a raid by detectives from the Directorate of Criminal Investigations (DCI) on the company’s Mombasa offices last month, during which CEO Francis Muthamia and several key figures from the Finance and Procurement departments were removed.

Besides Muthamia, more officials were shoved aside after detectives from DCI conducted a dramatic raid on the company’s Mombasa offices. The DCI officers, acting on a forensic audit report, interrogated the CEO and multiple senior staff from the Finance and Procurement departments before they were later suspended.

The raid came a day after a KTDA board meeting chaired by its current Chairman Chege Kirundi. The meeting attended by Tea Board of Kenya CEO Willy Mutai reportedly adopted the audit’s findings, which pointed to serious irregularities in procurement processes and suspected corruption.

Following their questioning, the affected individuals received “show cause why” letters, requiring the suspended officials to explain why they should not face disciplinary measures.

The DCI raid came just one day after a KTDA board meeting chaired by Kirundi. The CEO of the Tea Board of Kenya Willy Mutai also said attended the meeting that was convened to assess findings in the forensic audit report.

The audit by the Tea Board of Kenya followed multiple allegations of procurement malpractice and corruption within Chai Trading. Chai Trading, a fully owned KTDA subsidiary headquartered in Mombasa, offers a range of services, including tea trading, value addition, freight, warehousing and logistics to a variety of clients.

All suspended managers have since been replaced in acting capacity by personnel seconded from KTDA headquarters, sources confirmed.

“The investigation has triggered a complete management reshuffle at Chai Trading. Those suspended will be facing formal charges once DCI completes its investigations,” the source added.

Chai Trading Company handles tea trading, warehousing, freight, logistics and value addition services on behalf of KTDA and other clients.

Insiders at Chai Trading said the forensic audit had been prompted by a wave of complaints from stakeholders regarding procurement breaches and possible embezzlement. This is not the first time Chai Trading’s leadership has come under scrutiny.

In May 2022, the Assets Recovery Agency (ARA) launched a case against CEO Francis Muthamia over failure to account for funds amounting to Ksh35 million believed to be proceeds of corruption. A court ruling in October 2024 ordered the funds to be forfeited to the state.

Insiders have hinted that the anti-corruption crackdown may extend to KTDA’s Nairobi headquarters, where the agency’s top management staff are reportedly under investigation.

All suspended managers have since been replaced in acting capacity by personnel seconded from KTDA headquarters, sources confirmed.

“The investigation has triggered a complete management reshuffle at Chai Trading. Those suspended will be facing formal charges once DCI completes its investigations,” the source added.

Chai Trading Company, based in Mombasa, handles tea trading, warehousing, freight, logistics and value addition services on behalf of KTDA and other clients.

KTDA is a private company collectively owned by over 600,000 smallholder tea farmers across 16 counties. These farmers are shareholders in 54 tea companies, which, together with 15 satellite factories, own KTDA Holdings and its eight subsidiaries.

These subsidiaries include Chai Trading Company, KTDA Management Services, Majani Insurance Brokers, Kenya Tea Packers Limited, Greenland Fedha, KTDA Foundation, Tea Machinery and Engineering Company, and KTDA Power Company.

Under the leadership of Kirundi – who assumed office after a boardroom power shift – the KTDA board has embarked on a reform campaign aimed at rooting out corruption and restoring accountability across its subsidiaries.

“The new board is determined to protect farmers’ interests,” said one source familiar with the board’s strategy. “These measures are just the beginning.”

Sources suggest that the suspended officials are likely to face economic crimes charges once the DCI concludes its investigations. There are also indications that the inquiry could extend to KTDA’s headquarters in Nairobi, with top management there also reportedly under investigation by the DCI.

KTDA is a private company owned by around 600,000 smallholder tea farmers across 16 tea-growing counties in Kenya. These farmers are shareholders in 54 tea companies that collectively own KTDA Holdings and its subsidiaries. Some of these companies have expanded their operations by establishing 15 satellite factories, bringing the total number of smallholder-owned tea factories to 69.

The new KTDA board, under Kirundi’s leadership, is said to have launched a vigorous campaign to restore integrity at all KTDA’s subsidiaries and enhance value for the country’s tea farmers. Kirundi’s appointment followed the controversial ousting of former chairman Enos Njeru in what has been described as a boardroom coup.

• A Tell Media report / By Patrick Mayoyo