TBK: Exposes billions loot, forged accounts

The Mountain Journal 

editor@themountainjournal.co.ke

  A damning audit by the Tea Board of Kenya (TBK) has unearthed a system of  mismanagement at  Kapkoros Tea Factory in Bomet County.

Report by the regulator reveals how leadership has misappropriated farmers’ money leaving a trail of billion-shilling deficit at the factory.

The investigations done between April 22 and April 30, 2025, exposed inflated costs, manipulated accounts, nepotism, and reckless governance that have left farmers facing their worst financial crisis since the establishment of the factory.

“The Kapkoros group exhibits malpractices and systemic weaknesses in financial management, governance, and operational controls, which pose a serious risk to the group’s sustainability and farmer earnings,” read the report by TBK CEO Mr Willy Mutai.

The audit also found labour costs spiraling out of control, climbing from Sh19.52 in FY 2023/24 to Sh23.40 per kilo of tea in less than a year.

One glaring case was the irregular recruitment of Agnes Cherotich as a clerk at the Motigo factory. The report states that the recruitment was outside the approved establishment, no interviews were conducted, and the appointee is related to a sitting director.

Wood fuel costs also increased, rising to Sh17.34 per kilogram despite the company’s extensive woodlot plantations.

“The company must explain how the significant investment in woodlots has impacted cost reduction,” the Tea Board ordered.

Leaf collection has become another cash pit. The cost of private transport for green leaf shot from Sh7.2 M in 2021/22 to Sh21.48 M in 2023/24.

The auditors accused Kapkoros of manipulating accounts by inflating closing stock values by Sh203 million.

“Closing stocks were valued at Sh274.65 per kilo instead of the weighted average of Sh241.99 realized during the year, contrary to International Accounting Standard 2 (IAS 2),” the report states.

The inflated figures were used to secure loans—but with market prices collapsing, the deception has left Kapkoros staring at a Sh512 million projected loss this financial year.

The TBK report slams the Kapkoros board for excesses and conflicts of interest.

“The board held 169 meetings and activities in FY 2023/24, contrary to good corporate governance practices,” the auditors wrote.

Board costs have soared by nearly 65 per cent since 2019/20, with actual expenses overshooting budgets by a staggering 244 per cent.

One director, Simon Mutai, is flagged for inflated deliveries: “Green leaf deliveries by the director far exceeded expected output from his tea bushes, leading to a potential overpayment of Sh156,502.40.” 

The financial wreckage is devastating. The Kapkoros group tumbled from a Sh2.27 billion surplus to a Sh 975 million deficit in just nine months.

Kapkoros alone posted a deficit of Sh 45.11 per kilo of green leaf. Yet, in a reckless gamble, the board still paid farmers Sh18.86 per kilo despite actual performance standing at only Sh10.75.

“The decision negatively affected the performance of Motigo and Olenguruone factories,” the report warns, fueling farmer unrest and calls to break up the group.

The auditors also flagged Sh704 million in capital expenditure with no documentation, diversion of funds meant for the Kamogoso factory to other projects against shareholder resolutions, and a shady Sh162 million land purchase never approved at an AGM.

Missing CCTV footage from Tirgaga factory on dates linked to tea thefts—“suggesting deliberate erasure,” the report notes.

The Tea Board has given Kapkoros 14 days to respond.

“The chairman of Kapkoros Tea Factory Company PLC is required to provide written explanations, relevant documentation, and proposed corrective measures within fourteen days. Failure to provide a satisfactory response will lead to further regulatory or legal action,” CEO Willy Mutai wrote.