Development Bank sues minister over Sh390m loan

Development Bank of Kenya has sued Medical Services assistant minister Kazungu Kambi and a company associated with him for failure to pay a loan amounting to Sh390 million.

The bank says Mr Kambi and two associates, Ezekiel Karisa and David Tuitoek, had guaranteed collapsed Riva Oil companies — which had operations in Tanzania, Uganda, and Zambia.

The firm, which Mr Kambi is also a director, borrowed Sh250 million in 2007 and the sum had accrued to Sh304 million in 2010, which the bank is demanding with interest of 17 per cent yearly — pushing the sum to Sh390 million.

Mr Kambi unsuccessfully defended his Kaloleni constituency seat in the March 4 elections and had served from one term.

“The plaintiff…made a demand for payment from the defendant the sum of Sh304 million vide various letters to which defendants neither responded nor paid the amount in demand,” says the bank.

The loan was advanced to Riva Oil in two instalments of Sh60 million and Sh190 million. The company offered parcel of land in Kilifi as security for the loan and Mr Kambi, Mr Karisa and Mr Tuitoek topped up with personal guarantees for the debt.

Development Bank says Mr Karisa acknowledged the outstanding debt in 2011 and offered his share of the land in Kilifi that was charged as collateral for the loan to offset the amount due to him.

The auction of the land became difficult due to the conditions attached to the title deed prohibiting subdivision of the land whose size was not disclosed, according to court documents.

Mr Kambi is also being accused of failing to appear in court and has not filed a defense within the stipulated time after being served with the court documents.

“The plaintiff request for judgment against the third defendant Samuel Kazungu Kambi who has failed to file appearance or defense within prescribed period or at all,” said Development Bank in court papers.