There is legal drama brewing in Nairobi’s corridors of justice, as a foreign national accuses a local agribusiness company of fraud.
Portia Kodoni, a UK-based investor, has initiated legal proceedings against Afriavo Orchards Limited, a major player in Kenya’s agriculture space, alleging contractual breaches, and is threatening to file insolvency proceedings against the company.
The Eastern Bypass-based Afriavo Orchards prides itself on “sourcing the finest fruits from trusted growers across Kenya.” and it’s one of these fruits at the centre of this saga.
Kodoni last week filed a statutory demand in the High Court of Kenya at Milimani’s Commercial and Admiralty Division.
The UK national is demanding a payment of $150,000 (Ksh 19.3 million) from Afriavo, being the amount previously invested in the venture. It should be paid within 21 days from October 16, 2024, failing which liquidation proceedings against the company will be initiated.
A Sour Harvest
Correspondence reviewed by this writer reveals a complete breakdown in a business relationship, stretching back to at least July this year.
The investor forked out over $100,000, which was supposed to go towards the establishment of a 10-hectare apple farm and nursery in Zimbabwe. Afriavo Orchards specifically deals with the Wambugu Apples, the famous variety from Nyeri.
Mathew Njenga, the individual named by Kodoni as her contact in this whole deal, is the CEO of Afriazo Orchards Ltd. and the Managing Director – Wambugu Apples. He’s also the chairman of Kenya Apple Growers and Exporters’ Association (KAGEA), according to his Linkedin.
Kodoni accuses Mathew and Afriazo of fraud, in that all the big promises made went undelivered.
According to her, Afriazo Orchards was to work on her Zimbabwe farm, with the substantial down payment paid as agreed.
However, many months later, not a single seed has been planted, nor has any work begun, and efforts to reach out to Afriavo have been met with empty promises, and sometimes just radio silence.
When the original venture floundered, Kodoni sought to recoup her losses by converting the investment into an 8% equity stake in Afriavo.
However, this second agreement proved just as precarious.
The two parties have gone back and forth with demands and counter-demands, but little has come out of it. In one letter dated August 30th, Afriavo Orchards acknowledged the broken business relationship, and advised a termination of the agreement.
It so happened that there was also a secondary agreement about leasing an office space from Afriavo. This was done through a 3rd entity, Enzispring Limited.
After being served with the first demand letter, Mathew, the CEO, immediately ordered Kodoni and team to vacate the premises within 24 hours. This was via a WhatsApp text.
It appears though that cooler heads prevailed, because a formal lease termination letter was later sent, giving them up to 90 days to vacate.
According to Afriavo, the premises had an outstanding rent balance of $3,900, an amount they vowed to deduct from the $100,000 investment.
Kodoni contends that she cannot be held liable for that, advising Afriavo to instead channel the claim to the best suitable party.
All in all, Afriavo offered to refund Kodoni $96,100 (minus the rent) in four equal installments within 90 days.
This arrangement, Kodoni felt, left her with the short end of the stick, not to mention the trauma of past broken promises. Having entered this venture to make money, she felt cheated.
In mid-July this year, Kodoni conducted an audit, to ascertain the true value of her 8% shareholding in Afriavo. Although Afriavo insists the deal was for 7%.
Her argument was that since she bought the shares both as a “going concern” and for sale value, she needs to extract the full value from her investment. This includes an annual dividend for 2024.
She further served Afriavo with a notice of intent to sell her shares, contingent upon Afriavo’s buyout offer being underwhelming.
This, she contends, is the only way the transaction will account for her shares’ appreciation in value, and her loss of dividends for the year.
What follows?
Portia Kodoni has now taken the next steps.
At Milimani Commercial & Admiralty Division, she has filed an insolvency notice, no. E197 of 2024.
If within 21 days Afriavo Orchards Limited fails to either pay up, or file a counterclaim, set-off or cross-demand exceeding $150,000, then Kodoni will file for a liquidation order against the company, to recover the funds.
We’ll certainly be keeping an eye on the proceedings at Milimani.
