PwC pulls out of Tatu City offshore accounts probe

Consultancy firm PriceWaterHouseCoopers (PwC) has declined to investigate offshore loan accounts of real- estate development firm Tatu City following an intensified tussle between the multibillion- shilling project’s local and foreign partners.

PwC on Wednesday told Justice Eric Ogola that the vicious battle between foreign shareholders Rendeavour and their local partners Nahashon Nyagah and Vimal Shah has stalled a planned audit that the judge ordered in May.

The consultancy said the shareholders had failed to sign an execution letter for the audit, hence it was not able to begin the process.

The firm added that one of the parties in the suit had made the anticipated audit part of a slander campaign, which fuelled its disinterest in the job.

Justice Ogola ordered the audit following an impasse between the shareholders on the actual position of loans taken to buy land for the project initially estimated to cost $3 billion (over Sh300 billion). PwC said the shareholders failed to agree on the terms of the audit.

“The letter of engagement has not been signed by the parties. There appears to be hostility between the parties which may not allow us to proceed. We are a professional body and some disparaging remarks have been made about PwC by one of the parties. We therefore seek to withdraw from the assignment,” said the PwC lawyer Peter Gachuhi.

The consultancy added that it wrote to the parties in the suit stating that it was ready to start the audit, but did not get the green light to look into the accounts.

Justice Ogola had granted the project’s partners and PwC until Wednesday to file an audit report on the offshore loan accounts. The judge also ordered the parties to appear before him on October 1 for a hearing.

READ: Tatu City bank loans audit sparks fresh directors row

The audit was intended to verify the amount of money borrowed from the offshore financiers since the project began, and what balance was still owed to the lenders.

Foreign partners Stephen Jennings and Hans Jochum Horn had in an earlier court application claimed Mr Nyagah and Mr Shah had close ties with PwC and that they had tried to use that rapport to manipulate the scope of the audit.

“The auditors, at the prodding of Mr Nyagah and Mr Shah, perceive the scope of the audit to include carrying out background checks on the financiers’ ownership whereas this exercise was to determine the total loan amounts secured from inception and the reconciliation on repayments,” said Mr Horn.

The shareholders’ dispute has raged since founding of the project nearly five years ago. Mr Nyagah and Mr Shah claim the foreign partners want to oust them and continue “mismanaging” the project. But the foreign partners claim their two have abused their trust and instead illegally transferred land intended for the project.

The Directorate of Criminal Investigations (CID) has since called for the arrest and prosecution of Mr Nyagah over an alleged grand scheme to defraud real-estate developer Tatu City of more than Sh5 billion.

Detectives investigating transactions involving the project’s subsidiaries have concluded that Mr Nyagah used close relatives and associates to irregularly transfer shares worth Sh5.3 billion, and have recommended that he and five others be charged in court.

Mr Nyagah has however been granted a court order stopping his arrest over the matter until a suit he filed challenging the validity of the investigations is concluded.