Embattled investment firm Cytonn Investments Management PLC has sued Alego Usonga MP Samuel Atandi over alleged defamation by claiming that there was fraud at real estate projects initiated by the firm.
In the suit filed at a magistrate court in Milimani Nairobi, the firm is also aggrieved by the MP’s allegation that “Cytonn is a pyramid scheme”.
The MP is alleged to have made the defamatory statements on December 14, 15 and 16, 2022 through his Twitter handle, “causing unjustified concern on Cytonn’s both present and prospective clients”.
The investment firm says its business operations suffered harm and injury as a result of the alleged statements.
“These statements have posed, and continue to do so, a serious threat to Cytonn Investments Management Plc business as the statements seek to discredit the authenticity of its business and operations,” says the firm in court papers.
It adds that during the period it has been the subject of defamatory attacks the business has witnessed severe blows to its cash flows amounting to over Sh5 million.
“The statements were written solely to target Cytonn Investments Management Plc and its directors with intention of occasioning disrepute upon them and inconceivable injustice considering the efforts that have painstakingly been put in to build their reputation in the marketplace over the years,” says Cytonn.
The firm wants the court to stop Mr Atandi from publishing defamatory tweets on any platforms or forums against it.
Unless the MP is stopped, the firm says, it would continue to incur huge reputational damage, resulting in loss of business as well as both present and prospective clients.
It adds that the alleged defamatory statements were also intended to damage the investments of over 50,000 Kenyans that are under the management of the company and to scare away investors with whom Cytonn works closely.
The firm wants the MP ordered to pull down the allegedly defamatory statements and issue a public apology.
The court case comes at a time the Parliament’s Public Petitions Committee is considering petitions lodged last November by Josephine Awuor, Caroline Atieno and Omondi Abonyo asking MPs to investigate Cytonn over a Sh7.8 million a unit housing project, dubbed ‘The Ridge’ on Kiambu Road.
The committee met with the three petitioners last December and asked the House team to get to the bottom of the matter to safeguard their investments.
The committee is set to present its report when the House resumes its sittings on February 14.
After meeting with Cytonn management, the committee will also meet other interested parties in the matter before retreating to write its report.
The petitioners want MPs to engage Cytonn and its partners to clarify how they intend to fulfil their agreement with the investors of The Ridge’ development project.
They also want the lawmakers to hold the chief executive of Cytonn responsible for the mismanagement and secure the timely refund of investors’ money.
According to the petitioners, investors had paid in excess of Sh3.9 million but the company keeps on telling those who invested that they are finalizing the project.
In 2018, the petitioners told MPs that Cytonn Investments started experiencing internal financial problems as there has been no construction of the project contrary to what it is saying that they are making progress.
The petitioners say that investors made an initial instalment of 10 percent of the sale value plus a booking fee of Sh50,000.
On raising alarm over the slow progress of the project, the petitioners told MPs that investors started asking for refunds but were told they would incur a mandatory 10 percent loss on their deposits.
“In September 2019, when many investors began seeking refunds, the company announced that it would put the money in its substituent platform the Cytonn High Yield Solution, for one year to earn interest at 18 percent and then start refunding,” reads the petition in parliament.
The petitioners however say that in 2020, the company began blaming the COVID-19 pandemic interruption and promised to refund the investors in 2021, during which time they kept sending statements to show interest was being earned.
“Later, an administrator was appointed and the company continued to experience financial difficulty, and to date, nothing has come to fruition with regards to investors’ money, nor has the Ridge project taken off,” the petitioners say.
“Notwithstanding this debacle, the company has ostensibly kept their posts alive on social media platforms on investment analysis to dupe the investors and unsuspecting Kenyans that it is liquid and in an optimum operational capacity,” reads the petition.