KPC accuses former pipeline contractor Zakhem of moving assets beyond creditors’ reach

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Kenya Pipeline Company (KPC) has asked the High Court to order Zakhem International Construction Ltd to deposit KSh269 million as security for legal costs, accusing the Lebanese contractor that built the Mombasa-Nairobi oil pipeline of transferring assets to other firms to keep them out of reach of its creditors.

The application, details of which were first reported by the Daily Nation from court papers, was filed in response to the fifth suit Zakhem has filed against it in seven years. Justice Francis Gikonyo is due to hear arguments on November 19.

The claims are contained in KPC’s filings and have not yet been tested in court.

What Zakhem is claiming

Zakhem filed the new case in May, seeking $84.117 million (about KSh10.9 billion) for alleged breaches of the 2014 contract to build the 450-kilometre pipeline, which was commissioned in 2018.

The bulk of the claim, $65.081 million (KSh8.45 billion), relates to additional work, design changes and extra materials that Zakhem says were outside the original scope. It says some of these variations were assessed as allowable by Nyara Consultants, the project’s scheduler. A further $19.036 million (KSh2.472 billion) is sought as interest on payments it says KPC made late.

The two companies negotiated in January 2023, after which KPC paid Zakhem $113 million (KSh14.6 billion) and earlier cases were withdrawn. Zakhem now argues that claims for variations and interest were left unresolved in those talks. In all, KPC has paid the contractor $608.396 million (about KSh79 billion) since 2018, part of it arising from litigation.

The asset transfer allegations

KPC’s in-house counsel Nelson Nyaduwa says Zakhem transferred land, 17 vehicles and 22 pieces of heavy construction equipment to Mokowe Traders Ltd and Bangal Marina Resorts Ltd “at a pittance”. KPC claims the two firms are nominees of Ahmednasir Abdullahi Advocates LLP, the law firm acting for Zakhem.

Among the transfers listed are more than four acres in Nairobi’s Spring Valley owned by directors Abdalla Salim Zakhem and Ibrahim Salim Zakhem, which KPC values at over KSh1.6 billion, and a 5.2-acre plot in Ruaraka that hosts Zakhem’s headquarters. KPC says the Ruaraka land went to Mokowe Traders for KSh250 million although its market value is about KSh1.3 billion before any developments are counted. A plot in Voi is also named.

The pipeline firm also argues that fee agreements between Zakhem and its lawyers dated September 5, 2019 and November 15, 2022 are void under section 46 of the Advocates Act, which bars percentage-based fees, and that they were used to move money received from KPC away from creditors.

It further cites the diplomatic standing of Abdalla Salim Zakhem, who is Lebanon’s honorary consul in Nairobi. KPC’s lawyers, Wekesa Simiyu Advocates, say the company’s Thika Road premises “are guarded by the General Service Unit (GSU) of the National Police Service and that ipso facto restricts creditors”.

Subcontractors still unpaid

KPC’s case for security rests on Zakhem’s record with its own subcontractors on the pipeline. According to the filings, Multiple ICD (Kenya) Ltd, Azicon Kenya Ltd and Quality Inspectors Ltd have been unable to enforce awards totalling KSh1.215 billion, while Oilfields Engineering and Supplies is seeking to have a KSh2.255 billion arbitration award adopted as a court order.

The dispute has been in the courts since 2019. In that first suit, Zakhem sought $126.26 million and won a partial summary judgment of $44.02 million in June 2020. In May 2025, Justice Mong’are dismissed a bid by Zakhem to attach a KPC account at Standard Chartered for a further $7.16 million, finding that the amount payable under that judgment had already been determined in earlier rulings and that the account was pledged to KPC’s lenders.

Why it matters for shareholders

KPC is now listed on the Nairobi Securities Exchange, so a contingent claim of this size is a matter for its investors as well as the Treasury. The company recently reported a 13% rise in profit to KSh11.58 billion for the 2026 financial year, which means the KSh10.9 billion Zakhem is seeking is close to a full year’s earnings.

If the court grants KPC’s application, Zakhem would have to place the KSh269 million in an interest-earning account held jointly by both sides’ advocates before its suit proceeds further.