Founder of fallen Moi-era firms Mungai claims frustration in Sh7bn case

A director of two lending institutions placed under statutory management during former President Daniel Moi’s era Thursday told the court how efforts to get details of his firms’ audited accounts were frustrated.

He has sued the State for Sh7.3 billion compensation.

Mr Mugo Mungai, founder Capital Finance Limited (CFL) and Pioneer Building Society (PBS), told High Court judge Joseph Onguto that the receiver managers had sold the firms’ assets without authority of the court or owners.

He said that the receiver managers also defied a court order issued in 2009 that called for an audit on their books of accounts, claiming they did not have funds to conduct the audit.

“We even provided to pay for the audit but nothing was done. We tried everything but failed and we came to court to complain about the bad treatment,” said Mr Mungai.

He claims that the then Registrar of Building Societies placed CFL and PBS under receivership in November 1986 as part of a scheme to forcibly acquire their assets, which would have been worth Sh7.3 billion today.

Lawyer Njoroge Regeru told the court that Mr Mungai’s properties were targeted for political reasons and that Mr Mungai was kicked out of office in November 1986 and to date does not know what happened to his property.

The lawyer explained that the receiver managers of CFL and PBS should be compelled to explain what they did to the over 200 houses, among other assets, that were owned by the two firms, and if they paid the creditors, which was the main purpose of the receivership.

The two lenders had a massive asset portfolio that included Buruburu’s Pioneer phase I and II estates, several parcels of land in Gigiri, Nairobi, and other parts of the country.

READ: Collapsed Moi-era lenders sue State for Sh7.3bn payout

Mr Mungai explained that he walked out of the company office empty handed and that, “it is the official receiver who controlled everything,” and can best explain where the title deeds of the plots are today.

Mr Mungai, CFL and PBS have sued the Attorney- General, their official receivers and the Registrar-General.

In the responses filed in court earlier, the Attorney-General said the State will not compensate CFL and PBS because they were legally declared insolvent.

The receiver managers had in court papers also said that the High Court placed them under receivership in November 1986 as the two firms were likely to go under with millions of shillings of customer deposits.

Hearing continues on November 1.