Agricultural firm Kakuzi spent Sh137.4 million on lawyers in the year ended December to defend itself against charges that its employees carried out human rights abuses including rape and violence.
The expense is disclosed in the company’s latest annual report. The Nairobi Securities Exchange-listed firm, alongside its parent company Camellia Plc, was sued in the United Kingdom by law firm Leigh Day which represented victims in Kenya and Malawi.
Camellia owns a 50.7 percent stake in Kakuzi, giving it control of the company. Kakuzi was later dropped from the case but had already incurred substantial legal costs.
“The exceptional legal expenses are legal costs incurred both in Kenya and the UK by the company defending itself from legal claims brought against it … by a UK law firm which wanted to bring the company into the jurisdiction of the United Kingdom,” Kakuzi says in the report.
“The company was dropped as a party to these UK proceedings in July 2020,” the agricultural firm added. Litigation against its parent firm Camellia continued and the multinational last month reached a settlement with Leigh Day, agreeing to pay Sh696 million to the Kenyan victims and Sh348 million to the Malawian victims.
The amount includes payouts to victims of alleged violence and rape and remedial investments in the local community in Murang’a County where Kakuzi runs its agricultural business.
The Sh137 million legal bill incurred by Kakuzi is among the expenses that contributed to the company’s net profit dropping 12.8 percent in the year ended December to Sh622 million compared to Sh713.4 million a year earlier.
The firm’s sales rose by a quarter to Sh3.6 billion but costs went up by even larger margins, resulting in the reduced profit. Despite the weaker earnings, Kakuzi declared a larger dividend of Sh18 per share, raising it from Sh14 per share paid on the results for the year before.
