Economy

Jirongo stops CBK from selling his Sh7bn Ruai land

cj

Former Lugari MP Cyrus Jirongo. Central Bank wants to auction Jirongo's land over a Sh20 billion loan he allegedly owes it. PHOTO | FILE

Former Lugari MP Cyrus Jirongo has stopped the Central Bank of Kenya (CBK) from auctioning his 1,000-acre land in Nairobi’s Ruai estate over a Sh20 billion loan he allegedly owes the bank.

Mr Jirongo sought and got the court injunction on Monday just two days before auctioneers were due to put the land up for sale.

“Pending the hearing and determination of this application, an injunction is hereby issued restraining the Kenya Deposit Insurance Corporation (KDIC) — an agency that is managed by the CBK — or its agents from interfering or in any manner altering or dealing with Offshore Trading Company’s land reference number 12973/3 in Nairobi,” Lady Justice Farah Amin ruled.

The politician had argued before the court that the CBK had not followed the law in the intended sale of his land.

The CBK, through the KDIC, had planned to auction the land Wednesday to recover money that collapsed Postbank Credit lent Sololo Outlet — a company owned by Mr Jirongo.

Sololo defaulted on the loan, which was extended to it for construction of residential estates that were to be sold to the National Social Security Fund (NSSF).

The NSSF had an agreement with Sololo to buy an incomplete housing project in Nairobi’s South B Hazina estate. Mr Jirongo had used the Ruai land owned by another of his companies, Offshore Trading, to guarantee the loan.

“The suit property is currently valued at over Sh7 billion and is of great sentimental and commercial value to the applicant. It is impossible to replace it in the event of the unlawful intended sale,” Mr Jirongo argued.

READ: Jirongo’s 1,000 acre Ruai land set for auction

The CBK had issued Sololo Outlets with three demand letters between March and August last year, and copied Offshore in the demands.

Mr Jirongo contends that the CBK only issued demands for payment of the loan, but did not furnish Offshore with a written demand for the land that was charged to the loan, as required by law.

The politician added that his firm had not been granted the three-month grace period required by law to rectify the default, and that some people party to the process were not served with the third demand letter.

Offshore reckons that other personal guarantors and the county government have not been furnished with the third notice.

Mr Jirongo claims the loan had 26 guarantors with the principal guarantor being Cyrot Limited. Others are Dr Davy Koech, Kuza Farms and Allied Limited, Kipa and Sons and Cyper Enterprises.

Offshore has also accused the CBK of refusing to issue it with a statement of accounts so as to determine the amount it owes.

The 1,000-acre land is the subject of another court dispute in which Mr Jirongo has accused the KDIC of fraud and coercion directed at frustrating him and Sololo Outlets.

While he does not divulge the details of the KDIC’s coercion, Mr Jirongo says it is linked to the charges he and other entities associated with him are facing over the Sh20 billion loan to Sololo Outlets.

“KDIC has not been able to dispel these claims but has opted for a negotiated settlement under which it has agreed to settle the matter at various amounts totalling Sh1.4 billion,” says Mr Jirongo. Mr Jirongo is currently pursuing a Sh1.4 billion claim from the NSSF relating to the Hazina Estate for which the loan had been taken.

Mr Jirongo’s deal with the NSSF did not have a happy ending after he raised the price of the estate to Sh2.65 billion in May 1993 from an initial Sh1.2 billion, citing a jump in material costs.

EARLIER: Jirongo locked in another land row

The NSSF terminated the contract, having paid Sh900 million and hired a different contractor to finish the work. The estate consisted of 420 homes, a school and a shopping centre.

Postbank Credit collapsed in May, 1993 holding Sh3.8 billion of customer savings. It had loaned out Sh3.6 billion of which Sh2 billion has been recovered.

The CBK is yet to compensate depositors who held a total of Sh2 billion in the bank and it hopes to use cash recovered from Mr Jirongo to settle some of those accounts.

Postbank Credit was one of the banks involved in the Goldenberg Scandal which brought several banks to their knees during the Moi era. Mr Jirongo was a strong political figure during this era after he led a popular youth group, YK92, to campaign for then President Moi.

Twenty-one banks went under during that era owing to political interference and mismanagement. The CBK’s deposit protection fund has, however, been pursuing those who defaulted on loans issued by the collapsed banks, including Mr Jirongo.

In 2011 Mr Jirongo was paid Sh490 million by the NSSF as an out-of-court settlement for a Sh4.5 billion claim for breach of contract relating to the estate transaction. The NSSF had also filed a claim of Sh3.1 billion against the former MP which led to the out-of-court agreement.

Mr Jirongo has, however, made a further claim of Sh1.4 billion from the pension fund, arguing that the Sh490 million was not a final settlement but had been accepted on the basis of further payments.

The NSSF has handed over the houses to individual owners.

The former MP had disclosed that he had planned to sell the Ruai land in order to settle a Sh32 million debt owed to Emris Investments in another land row filed in the courts last year. Emris had gone to court after Mr Jirongo failed to honour a commitment to pay the cash.

Emris’ claim arose from a Sh50 million compensation agreement between the two, after Mr Jirongo sold a house at Imara Daima to a third party even after the two had made a deal.

The 1000-acre piece of land has been sub-divided into smaller residential plots where developers have built temporary and permanent structures.

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