Ongeri in row with National Bank over Sh25m loan default

Newly appointed Kenyan ambassador to the UN Habitat, Sam Ongeri, is locked in a row with the National Bank of Kenya (NBK), which has accused him of defaulting on a Sh25 million loan balance.

Prof Ongeri, who appeared in court yesterday, however accused NBK of reneging on a pact that saw a repayment plan agreed on with the lender allegedly revised without his knowledge. “You are actually the ones supposed to refund some of the money I paid as rates,” Prof Ongeri told NBK in court.

The ambassador said he had made payments of Sh34.9 million, exceeding his liability limit of Sh25 million by Sh9.9 million.

“The bank should have written to me before revising the rates. It is the bank’s obligation to inform me that they have deviated their charges. We did our own tabulation and the amount I was supposed to repay for the Sh12.4 million I took was Sh22 million. However the court reviewed the amount and ruled that I should pay Sh33 million,” he said.

Prof Ongeri told the court that in regard to the demand, he wrote a letter to the Central Bank of Kenya protesting the “high interest rates charged by the bank.” National Bank sued the ambassador over a loan advanced to him to open a plastic manufacturing industry in Nairobi for which he put a Sh25 million guarantee.

The lender maintains that the ambassador was unable to make regular repayments on the loan despite several demands. “The defendant got into lengthy correspondences with the bank regarding the deteriorating status of its accounts, acknowledged the debt outstanding, implored the bank to grant it indulgence and submitted several proposals on reduction of the outstanding debt,” NBK said.

According to documents filed in court, the bank said the core reasons advanced for the default were poor management practices and structures at the plant and lack of raw materials, working capital and qualified personnel for optimum production. The ambassador said the bank was applying the wrong strategy to get money from him, despite having paid the amounts.

“When the bank demanded the outstanding balance, we entered an agreement that I would repay them Sh2 million every month ... I settled the end of my bargain because I had a name to protect. I discharged my responsibility but six years later I received a demand letter from the bank,” he said. 

NBK, however, says Prof Ongeri only paid one instalment of Sh1.9 million in September 1995, before the bank called in auctioneers after subsequent default.

Prof Ongeri says he wants his plot situated along Komarock road, placed as collateral for the loan.