A creditor seeking close to Sh1 billion from businessman Kenneth Matiba has picked retired court of Appeal Judge A B Shah to arbitrate over the dispute arising from the sale of Hillcrest Schools in Nairobi.
Hanif Sheikh and his two companies said Mr Shah, Njeri Kariuki and Rustam Hira had been proposed to hear the dispute in accordance with the terms of the contract under which he helped Mr Matiba get the Hillcrest Schools out of receivership by Barclays Bank.
Through his lawyer, Njoroge Regeru, Mr Sheikh said the contract provided for arbitration to resolve disputes such as the contention over how much the investor should be paid for helping Mr Matiba reach the debt servicing deal with the bank.
Mr Matiba had offered to pay Sh153 million for the service which saw Hillcrest Schools sold to Fanisi Capital for Sh1.6 billion. Fanisi Capital is associated with two techpreneurs - Ayisi Makatiani and Anthony Wahome.
READ: IT millionaires buy Matiba schools
Mr Regeru, however, told Commercial Court judge Daniel Musinga that Mr Sheikh and his two companies — the Bahamas registered Southcote Limited and locally incorporated Gulf Investments Africa — were owed Sh886 million and $100,000 (Sh8.3 million) in out of pocket expenses.
The lawyer said the money accrued from a provision in the contract allowing the hedge fund 27 per cent of the net proceeds after the outstanding loans were settled.
Mr Sheikh, a Kenyan-Canadian investor specialising in corporate insolvency, wants the matter taken before arbitration after Mr Justice Musinga last month temporarily issued orders stopping Mr Matiba from selling any of his properties in Nairobi, Naro Moru and Mombasa before the arbitrators determine the dispute.
Mr Sheikh is also seeking to stop the Matiba family from accessing the balance of sale proceeds from the sale of Marborough House for Sh210 million before the arbitration tribunal determines the amount of money the investment banker is entitled to upon disposal of some of Mr Matiba’s charged assets.
Mr Matiba’s family will respond to Mr Sheikh’s submissions on Thursday.
The court proceedings arose after the former Hillcrest school mate of Matiba’s son, Raymond, cried foul for alleged non-payment of professional services after saving some of the businessman and politician’s properties from imminent auction.
On June 29 last year, Mr Matiba and Barclays Bank signed a consent before Mr Justice Leonard Njagi to jointly sell the Hillcrest Group of Schools that the bank had placed under receivership over a Sh600 million debt.
READ: End of Matiba family empire as Hillcrest goes on sale
Hillcrest was later sold to a group of investors led by Mr Makatiani and Mr Wahome. Court documents indicate the net balance from the sale of Hillcrest was to be deposited in an account at Barclays in the name of Ritzenna Ltd in which Raymond, Andrew Smith and Hanif were signatories.
One of independent Kenya’s largest family-owned business empires, the top-end Hillcrest Schools which had an annual turnover of Sh600 million were placed under receivership in 2005.
Barclays had in 2001 tried to sell Mr Matiba’s five-star hotels that included Jadini, Africana and Safari Beach over a Sh1.8 billion debt but the process was stopped after the family lodged an appeal.
The schools and the hotels had accumulated loans of Sh9 billion by the time Raymond is said to have sought Mr Sheikh’s assistance.
A former Cabinet minister, Mr Matiba was detained without trial for leading the crusade towards multi party democracy during President Daniel arap Moi’s reign and was only released after suffering a stroke while in Kamiti Maximum Security Prison.