A couple of months after Makini Schools founder Elizabeth Mary Okelo sold the institution to three foreign investors for an estimated Sh1 billion, the educationist was in the market searching for a new deal.
In August 2018, Dr. Okelo’s friend, Mr. Charles Muhindi, introduced her to Chinese businessman Jia Dian. The two were to discuss the possibility of a business partnership.
Mr. Dian introduced himself as a representative of Longliqi Global Holdings, a multinational that manufactures natural health supplements in China.
The 32-year-old businessman convinced Dr Okelo that she could make good returns from an investment with Longliqi.
Dr. Okelo was impressed upon to buy Longliqi products from the manufacturer, then resell them to the public.
Longliqi manufactures products such as soy milk, white tea toothpaste, breath freshener, charcoal soap, and others that are marketed as natural health products.
The Chinese firm’s products are promoted through the multi-level marketing model, which involves the use of non-salaried workers to sell.
The sellers are then rewarded with a bonus for introducing other sellers to the network.
In most cases, an individual purchases the products from the company then sells to the public at a higher cost. In Kenya, the most prominent users of this model are GNLD and Tianshi.
While multi-level marketing is not illegal, it has been likened to the infamous pyramid schemes, which lure individuals into buying products that they are unable to sell.
The model has also been criticized for leaving the people at the bottom of the chain broke as those at the top make money.
The deal
During the August 2018 meeting, Mr. Dian told Dr. Okelo that Longliqi is registered in China but has subsidiaries in Nigeria and Kenya, which help drive its Africa business.
The Chinese national added that Longliqi was venturing into Uganda and Rwanda and that he had been authorized to negotiate exclusive distribution contracts for the new territories.
By the end of the meeting, Mr. Dian had convinced Dr Okelo to become an exclusive distributor of Longliqi products in Uganda and Rwanda.
Exclusive stockists are referred to as “super stockists” by the Chinese firm.
The deal looked good on paper.
Longliqi would open offices in Uganda and Rwanda to coordinate Dr Okelo’s imports.
The stock Dr Okelo would sell would generate a 10 percent commission.
Other individuals in the two countries looking to stock Longliqi products would only buy them from her.
Dr Okelo would also earn a four percent commission from products bought by other stockists.
The final condition was that Dr Okelo had to invest in products worth at least $100,000 (Sh10.9 million) for each territory.
No delivery
On November 19, 2018, Dr. Okelo signed a contract with Longliqi’s local subsidiary.
Interestingly, she had already paid for several products for more than one month before signing the contract.
Dr. Okelo wired $115,198 (Sh12.5 million) to Longliqi’s account at Shanghai Pudong Development Bank on October 8, 2018, for the exclusive Uganda distributorship deal.
She also wired $125,541 (Sh13.7 million) to the same bank account on the same day in respect to the Rwanda deal.
Immediately after the money was wired, Longliqi wrote to Dr Okelo’s bankers to state that they would be furnishing evidence of the products being imported to Kenya on the educationist’s behalf.
The educationist now says in court that more than one year later, Longliqi had not furnished her with the products ordered.
Dr. Okelo has sued Longliqi, its two African subsidiaries, and Mr Dian for allegedly defrauding her of Sh26.3 million by lying that it would give her an exclusive distribution contract for Uganda and Rwanda.
She says that despite the non-delivery, a number of other agents have been selling Longliqi products in Uganda and Rwanda.
Dr. Okelo adds that Longliqi and Mr. Dian presented forged documents to show that they supplied health products to her.
“As further confirmation of their fraudulent intentions, it later came to my attention… the defendants presented to my bankers a number of forged and/or fraudulent documents purporting the same to be genuine documents obtained and/or generated during the importation of the products detailed in the invoices,” Dr. Okelo says in court papers.
Judgment rescinded
Justice David Majanja had on December 1 delivered a summary judgment in Dr. Okelo’s favor.
A day after, Longliqi and Mr. Dian filed an application seeking to have the judge rescind his decision and allow them to file a defense.
On December 18, Justice Majanja agreed to rescind the judgment on the condition the defendants would each pay Sh15,000 in legal costs to Dr Okelo within 14 days.
Longliqi’s parent firm and Mr Dian have denied conning Dr Okelo, arguing the products ordered landed in Mombasa on May 28, 2019. They add that the consignment arrived in Kampala a couple of days later.
The Chinese firm adds that the goods were stored at Longliqi’s Kampala offices until June 5, 2019, when an individual identified as Gloria Anori collected them on behalf of Dr Okelo.
Longliqi and Mr. Dian insist Dr Okelo has been receiving the agreed on commissions and bonuses, and that they were paid out between August 2018 and March 2020.
The defendants do not, however, explain in the court papers how Dr Okelo qualified for commissions in August 2018, yet her consignment left China eight months later.
They claim that Dr. Okelo has been making more orders and that she even received a consignment as recently as June 2020.
“Dr. Okelo has been receiving weekly system bonuses, stockist commissions and promo awards, all paid by Longliqi Global Holdings (Co) Limited, through Longliqi International (Kenya) Limited in Kenya conveniently – where Dr Okelo resides.”
“Further, it is Longliqi Global Holdings (CO) Limited and Mr Dian’s averment that the exclusivity contract entered into between Dr Okelo and Longliqi International (Kenya) Limited and Longliqi International (Nig) Limited have since been terminated by effluxion of time,” the company says in its defence.
Longliqi and Mr Dian insist that Dr Okelo must prove to the court that she was defrauded.
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