South Sudan’s efforts to tap into the lucrative gold industry have hit a snag as two foreign firms — Israeli-owned 4MB Mining and London-registered Misnak International — fight in Kenya over prospecting equipment for the multimillion-dollar venture.
The problem is that the equipment has already been reshipped to Dubai’s Port Jebel Ali, away from Mombasa High Court’s jurisdiction.
The South Sudan government of President Salva Kiir had been trying to control the multimillion dollar mining sector — which is mainly in the hands of illegal miners — and had entered into a joint venture with a Panama-registered Israeli company, 4MB Mining Limited, run by Israeli businessman Yoram Moussaieff.
The Israeli firm was expecting to mine at least 30 million ounces of gold from the Luri Basin, 55km from Juba. At the current global prices, the gold 4MB is targeting could fetch about $36.7 billion (Sh3.767 trillion).
4MB had hired London-based logistics firm Misnak International to source, buy and ship prospecting equipment to Juba on or before March 17.
The aim was to benefit from tax breaks from the South Sudan government. The equipment landed at the port of Mombasa on March 4, after 4MB honoured an invoice from Misnak. But before Misnak could ship the equipment to Juba, it sent further invoices to 4MB demanding further fees, which 4MB refused to honour leading to a stand-off, even with the March 17 delivery deadline fast approaching.
After more than one month of back and forth between the two firms, 4MB opted to file a suit against Misnak at the Mombasa High Court.
The Israeli firm also listed Total Link Logistics, Union Link Logistics and Freight Forwarders Limited — three firms that helped clear and store the equipment in Mombasa — as interested parties.
Total Link and Union Link have since filed applications at the Mombasa High Court seeking to wriggle out of the case.
But the suit has now taken a new twist, as 4MB claims that Misnak has colluded with Union Link and Freight Forwarders to ship the equipment to Dubai’s Port Jebel Ali, a matter that could trigger a diplomatic row between Kenya and Juba.
4MB wants the High Court to order for release of the mining equipment, and for Misnak to bear all storage costs accumulated, compensation for the delay, and taxes that the South Sudan government will levy on the equipment which will now certainly be delivered long after the March 17 window.
In total, 4MB is seeking over Sh8.5 billion from Misnak, but the equipment is no longer in the country.
The row could also test Kenya’s relations with Juba, as it has been barely a year since a different court ruling saw South Sudan ditch Kenya as its prime banking destination. Juba’s government viewed the Nairobi High Court’s decision as a challenge to its sovereign dignity and immunity.
High Court judge Grace Nzioka had allowed Khartoum-based firm Active Partners Group to attach 12 bank accounts that South Sudan operated at Stanbic and Citi Banks, which had a Sh177 million balance.
Active Partners was trying to get a Sh4.7 billion compensation package it had been awarded by arbitrators — Mr Philippe Pinsole, Mr Karel Daele and Mr Richard Omwela — who faulted the South Sudan government for backing out of an electrification project.
Following the various court orders freezing South Sudan’s bank accounts and later allowing Active Partners to attach them, the Juba government opted to ditch Kenya for overseas lenders.
Misnak insists that it has been irregularly dragged into the suit, as 4MB did not comply with court procedures.
The British firm holds that 4MB was meant to serve it with a summons and the court documents at the same time. It adds that being based in London, 4MB ought to have obtained permission from the judge to serve a party outside the jurisdiction of Kenyan courts.
But High Court judge Njoki Mwangi ruled that the failure to comply with procedures can be corrected.
“The fact however remains that the said documents are in the court file, thus they cannot be considered to be a nullity for lack of a court filing stamp,” Justice Mwangi held.
Misnak has challenged the decision Court of Appeal. Appellate court judges Alnashir Visram, Wanjiru Karanja and Martha Koome have now ruled that there is an arguable case, and have now frozen the High Court proceedings.
4MB insists that Misnak has not approached the court with clean hands, as it shipped the equipment to Dubai with the aim of gaining an unfair advantage in the case.
As the case plays out, eyes will be on whether the courts’ determination will have a ripple effect on Kenya’s relations with South Sudan.