Mr Mbaru, who runs one of the largest investment banks in Kenya, lives on the prime piece of real estate in Nairobi’s leafy Muthaiga Estate.
Nairobi businessman Jimnah Mbaru has found himself at the centre of a real estate row involving theft of assets belonging to the collapsed Kenya National Assurance Company (KNAC).
Mr Mbaru, who runs one of the largest investment banks in Kenya, lives on the prime piece of real estate in Nairobi’s leafy Muthaiga Estate.
Parliament’s Public Investment Committee (PAC) has found that the house, which the chairman of Dyer and Blair Investment Bank bought in 2008 for Sh50 million, belongs to KNAC – the corporation that collapsed in the 1990s at the height of asset-stripping under the Moi administration.
The committee, which is investigating the loss of billions of shillings worth of assets that belonged to the insurance firm, heard that the Muthaiga property was initially transferred to a private company in 1996 though the agreed price of Sh25 million was never paid.
Bernice Gachegu, the registrar-general at the State Law Office who also acts as the official receiver manager for KNAC, told PIC that there are no records or banking receipts showing that any money was paid to the collapsed insurer with the transfer of ownership.
“We could not find any records indicating that Lesaro Ltd (the original buyer) made any payments for the property,” said Ms Gachegu, who was directed to report the illegitimate transfer to the police for investigation.
Mr Mbaru is the third owner since the property was initially transferred to Lesaro, which later sold it to another company in 2006 for Sh28 million.
Though the businessman has not been linked to the fraudulent transfer and subsequent disposal of the property, the latest findings are likely to put him among hundreds of property buyers who have recently found themselves heavily exposed by irregular deals.
Parliamentarians have argued that Lesaro is likely to have understated the price at which it sold the home to reduce its stamp duty liability.
Properties in the Muthaiga neighbourhood appreciated by a much wider margin over the 10-year period that Lesaro owned the home and it could not have merely fetched Sh3 million above the acquisition price of Sh25 million.
Stamp duty is charged at four per cent of the sale price and is payable to the Lands ministry.
Parliament is investigating how the government-owned insurer lost key assets prior to its collapse in 1996, when it was placed under receivership and the registrar-general appointed as official receiver manager.
In yet another case of fraudulent transfer of property, the State corporation has been found to have entered into a sale agreement with a developer for a parcel of land on Mombasa Road with an estimated value of Sh70 million in 2007.
PIC was told that the money was never paid to KNAC - the company that sank with billions of unpaid claims and more than Sh1.2 billion of its workers’ terminal benefits.
Parliament heard that the Mombasa Road land was transferred to Muimara Properties in October 2007 even though the outstanding land rents and stamp duty were never settled.
The law demands that such outstanding fees be paid before the execution of a sale on property.
The land has since been subdivided into 176 plots and sold to individuals who have in turn developed residential homes, but now risk being dispossessed.
John Mbadi, a member of the House committee, said that the current owners in both situations stood to lose their claim on the respective properties because they were fraudulently obtained.
“They failed to carry out due diligence on the properties before acquiring them and must be made to pay for their negligence,” he said.
Zablon Mabeya, the Commissioner of Lands, told the PIC that there were several anomalies in the transfer of both properties as land rents were still outstanding in both cases, admitting that Lands officials had abetted the fraudulent transactions.
The situation the property buyers find themselves in is a replica of the ownership tussle pitting the Kenya Airports Authority and members of a self help group relating to a parcel of land in Mlolongo – where the buyers have since been dispossessed of the land and any developments on it demolished.
