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Ecobank has sued Zakhem International Construction, a firm that built the recently completed Nairobi-Mombasa pipeline, over a Sh5.2 billion loan dispute.
The bank says Zakhem has diverted payment for construction of the pipeline to Stanbic Bank in breach of the loan agreement, putting at risk recovery of the amount.
The lender claims in the court documents that Zakhem Construction Nigeria approached it on behalf of its sister company registered in Cyprus seeking a loan to fund construction of the pipeline.
“A temporary injunction be and is hereby granted restraining and/or barring the respondents…from paying, transferring, remitting, alienating and/or otherwise disposing any proceeds or monies due under the agreement dated July 1, 2014, between the third and fifth respondents other than the applicants,” states one of the orders sought by Ecobank.
The bank says it has received information that “the contract has been fully performed and the project officially handed over to the Government of Kenya on July 11, 2018,” noting that it fears to suffer a loss, arguing that Zakheem has no known assets in Kenya.
READ: Lebanese company seeks Sh1.5bn more for pipeline delay
Ecobank Kenya and Ecobank Nigeria are listed as applicants while Zakhem International Construction (Nigeria), Zakhem International Construction Nigeria Limited, Zakhem International Construction Limited (Cyprus) and Zakheem Construction (Kenya) Limited are listed as 1st to 4th respondents respectively. Kenya Pipeline Company (KPC) is the 5th respondent.
Zakhem International Construction Cyprus, the firm that won the contract, allegedly issued unconditional instructions to KPC to remit 70 per cent of the payments through Ecobank.
But the bank claims that Zakhem had diverted the payments to accounts at Stanbic Bank, noting that already the loan of $52.7 million (Sh5.2 billion) is in arrears.
The KPC awarded Zakhem Cyprus a Sh48 billion tender to build the 20-inch multi-product oil pipeline linking Mombasa to Nairobi in 2014.
Zakhem Kenya had distanced itself from the dispute noting that it was a separate legal entity from the alleged sister companies and a stranger to the issues raised in the court.
Ecobank on Tuesday filed a fresh application seeking permission to serve the court documents on the firm’s offices in Nigeria, noting that the sister company in Kenya has rejected service.
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