KCB Group has defended its decision to auction a Sh700 million Kiambu coffee estate owned by President Uhuru Kenyatta’s kin, maintaining that it strictly adhered to the law.
The bank sold the 443-acre Muiri Coffee Estate Limited in 2007 at a cost of Sh70 million to Bidii Kenya Limited after a firm owned by President Uhuru’s cousin, Ngengi Muigai, defaulted on repaying a loan it took in 1989.
Muiri Coffee Estate had acted as a limited guarantor to the borrower, Benjoh Amalgamated Ltd, to a tune of Sh11.5 million and had paid Sh6 million by December 1994 towards offsetting the loan.
KCB chief executive Joshua Oigara yesterday told the House Finance, Planning and Trade Committee that the bank acted within the law when it liquidated the security pledged by the guarantor.
“Once you give your property as security, the law presumes you to be in the same shoe as that of the principal debtor.
There is no specific order provided in law on how a bank pursues securities given,” he said.
Mr Oigara was responding to a petition presented to Parliament by Gatanga MP Hurmphrey Kimani on behalf of two cousins of the President.
Ngengi Muigai, a director of Muiri Coffee Estate and Captain Kung’u Muigai of Benjoh Amalgamated asked Parliament to establish why KCB sold the land without the consent of the owners and before realising the securities offered by Benjoh, the primary borrower.
In 2002, KCB advertised Benjoh’s properties in a public auction, prompting the company to move to court demanding that the bank produces statements of accounts.
The duo said that instead of the bank providing the statements, it advertised for auction of Muiri Coffee Estate in June 2007.
According to their petition, no auction took place but two months later, the coffee estate was transferred to Bidii Kenya Limited.
Nominated MP Oburu Oginga wondered why the bank did not apply the rules of natural justice that require the property of the principal borrower is sold first before pursuing the guarantor’s.
Mr Oigara said once the bank is given securities of a loan, it consolidates them in one basket and pursues them in case of default following no particular order.
He said the bank had been vindicated because it had never lost in the 18 suits filed in court over the matter, some of which started some 28 years ago.