Sunday May 5, 2019
By JOHN KAMAU
Miraa transport vehicles along the Nyeri-Nanyuki highway on September 8, 2017. The story of how Mr Adan built his empire from a small miraa business paints a picture of a suave trader, but his ongoing fight over Blue Bird Aviation with his co-directors paints a picture of naivety, too much trust or both. PHOTO | FILE | NATION MEDIA GROUP
In court, few people have taken interest in the case involving
Yusuf Abdi Adan and the ownership of Blue Bird Aviation, one of the
largest airlines in the country — after Kenya Airways.
the case has opened a lid into an intriguing multibillion-shilling
business — the aviation and miraa (khat) trade — and a boardroom war
that has spilled from the courts to the Directorate of Criminal
self-made billionaire, Mr Adan is so reclusive that few Kenyans would
pick him out in the streets of Nairobi – where he owns Yala Towers and
Lenana Towers, among other high-end properties. His partners are as
filthy rich as well. They own shares in airline business, and
story of how Mr Adan built his empire from a small miraa business
paints a picture of a suave trader, but his ongoing fight over Blue Bird
Aviation with his co-directors paints a picture of naivety, too much
trust or both.
Mr Adan had entered
into the miraa business in the 1960s and by 1970s and early 1980s, he
was commanding the Meru-Chuka trade routes as his Toyota Land Cruisers
dodged shifta bandits to deliver miraa to towns like Mandera and, across
the border, in Bura Hawa inside Somalia.
years, miraa trade and use had grown among the Muslims, who eschewed
alcohol, and with urbanisation, it had been embraced by the youth to
keep them alert. Fresh miraa was always in greater demand and fetched
better prices in urban centres, and that explains why speed was (and
still is) of essence in the lucrative industry.
Mr Adan’s trade blossomed, so did unrest in north-eastern Kenya
intensify in the early 1980s and would reach its height in 1984 with the
Wagalla massacre, leading to insecure routes and a near-collapse of the
miraa business. While there was amnesty offered by President Daniel Moi
for all bandits to drop arms, the miraa trade suffered after then
Somalia president Siad Barre ordered a nationwide ban on miraa in 1984.
His intention, according to historians, was to punish the Issaq clan who
commanded the trade routes and were opposed to him.
to reach Mandera by road, Mr Adan decided to start lifting miraa from
Nairobi’s Wilson Airport where he leased aircraft from various
companies. It was a first in the miraa business, whose transport had
evolved within one century from camels and vehicles to aeroplanes.
the success of his business, he invited two ex-Kenya Air Force
officers, Col Hussein Farah and Major Hussein Mohammed to form Blue Bird
Aviation Company in 1992. Another entrant was a pilot, Mohammed
Abdikadir and each owned 25 per cent stake in the company.
bought one aircraft and as a businessman who used to trade in miraa, I
used to provide the sole business,” Mr Adan would claim in court papers,
which have shed light into intrigues in the multibillion-shilling
business. It was this Cessna 402, registration 5Y-LAM, that would be the
foundation of Bluebird Aviation, which today owns a fleet of 19
In the matter, a part of
which is now heading to the Supreme Court, Mr Adan has accused his
co-directors of “breach of trust, fraud, money laundering and theft” and
seeks to wind up the company – and get a resolution on the valuation
of a firm he helped build.
collapse of civilian government in Mogadishu in 1991, Somalia plunged
into turmoil and only a few daring traders would venture into the
murderous mayhem. Bluebird Aviation, which had a near monopoly in the
Horn of Africa, was one of them, and daily they delivered their cargo of
miraa to Somalia.
elderly Mr Adan says in court papers that for 23 years he had left the
running of the company to the three co-shareholders: Mr Farah was the
chairman and chief executive, Mr Hussein Unshur was the general manager
and finance director while Mr Mohammed Abdikadir was the technical
Without holding any position in the company, Mr Adan told the court that he based everything on “trust”.
“I have never questioned their actions or
activities and trusted fully that the defendants will not steal from the
company,” he says. “These human virtues are priceless in people of my
age, generation and who had no formal schooling.”
long as all was fine according to what I saw with my naked eyes, then I
hoped and prayed that all was fine,” he said in one of his affidavits.
23 years, he told the court, he was never invited for board meetings,
nor was he presented with annual financial statements. Instead, when he
asked his co-directors for dividends, they “would come with a polythene
bag containing some money … and always promise that I will be paid my
share of dividend.”
airline grew to become the second largest operator in Kenya, taking
advantage of the insecurity in the Horn of Africa, the man claims that
in 2015 he was asked to sell his shares. He also claims that the company
runs a lucrative multimillion-shilling deal with a foreign government.
is the valuation of this company, at $120 million (Sh12 billion), that
would allegedly form the basis for the fallout between these partners
after he rejected an offer of $30 million (Sh3 billion).
a heated exchange, (Mr Hussein Unshur, the finance director) told me he
would add a further $15 million (Sh1.5 billion) as a gesture of
goodwill,” he says in court papers.
He is now accusing his co-owners of running “secret and parallel accounts” where all cash payments are recorded.
daily cash payments by the miraa traders are made in this account. The
payment made by the (foreign) government, which is made in cash, is also
made in this account,” he claims.
a certain period, the money is transferred to offshore accounts through
either local Hawala money transfers or physical transportation either
through Jomo Kenyatta International airport or Wilson Airport,” he
claims in court papers.
filed in court show that Bluebird Aviation has offshore accounts and
that some of the directors operate the said accounts at Ajman Bank in
UAE under the name of Amazon International FZE.
Adan claims that money deposited in this offshore account is used to
purchase aircraft, which are then sold to the company through
lease-purchase agreements “at massive profits”.
Mr Adan claims that Mr Mohammed Abdikadir had acquired 49 per cent of
another airline, 748 Air Services, through an exchange of two Bluebird
Aviation aircraft, a director of 748 Air Service, Mr Ahmed Jibril, told
the court that neither his firm nor its Barbados-based sister company
has any interest in the running of Bluebird’s affairs and that they
should be struck off the suit. In his affidavit, he says that the 748
Air Services Kenya’s leasing deal with Bluebird is clean and known to
the Kenya Civil Aviation Authority (KCAA).
Mr Abdi contends that Bluebird did not receive the payments or that Mr
Adan did not have authority to enter into the agreements, I verily
believe that his recourse lies with his co-directors,” Mr Jibril says.
Mr Adan wanted to sue together with Bluebird Aviation. But the court
ruled that without approval of the company board, he could not.
general principles of Company Law are well established that, a company
is an association of persons formed for the purpose of some business or
undertaking which has a legal personality separate from that of its
members,” Justice GL Nzioka ruled.
legal personality of a limited liability company is that it acquires
its own property, rights and liabilities separate from its members upon
incorporation. … While companies are owned by their members, the
shareholders, they are managed by a board of directors. The duties owed
by the board are fiduciary in nature and are owed to the company rather
than the shareholders.”
For a company
that is building a new terminal in Hargeisa and owns properties in
Somaliland, the boardroom wars between the shareholders will open a
nasty lid into one of Kenya’s largest private firms.
the end of the saga, it will be a story that tests trust in businesses —
and offers a window, even for the taxman, into how regional miraa trade