- Justice Francis Tuiyott upheld a consent agreed between CMC and Absa to freeze the transfer of the cars pending the outcome of a suit in which the bank is seeking to auction the vehicles over a Sh585 million loan advanced to the Italian firm in 2017.
- Rift Valley Water Services Board (RVWSB), which issued the contract for the Itare Dam, sought to overturn the consent agreement, arguing that it had the rights over some of the cars and that the deal was done without its knowledge.
Absa Kenya #ticker:ABSA has won the first round in the fight for 98 motor vehicles purchased by the bankrupt Italian firm CMC Di Ravenna for use in the construction of the controversial Itare Dam in Nakuru.
Justice Francis Tuiyott upheld a consent agreed between CMC and Absa to freeze the transfer of the cars pending the outcome of a suit in which the bank is seeking to auction the vehicles over a Sh585 million loan advanced to the Italian firm in 2017.
Rift Valley Water Services Board (RVWSB), which issued the contract for the Itare Dam, sought to overturn the consent agreement, arguing that it had the rights over some of the cars and that the deal was done without its knowledge.
The judge dismissed the water services board’s petition, arguing that the ownership of the vehicles, including Toyota Prados, Corollas and pick-up trucks, was to vest in the agency only upon completion of the project which is yet to happen.
He also declined to enjoin RVWSB in the suit where Absa is seeking to auction the cars and recover its loan given the uncertainty in building the dam.
“On the material before court, and without further evidence or full argument, I am unable to say that the claim of breach of contract by RVWSB will prevail yet I cannot say it is trivial,” he said.
The judge said while the agency may have an arguable case against CMC for breach of contract, it failed to demonstrate an arguable case against Absa’s interest.
“The bank, as plaintiff, is the owner of these proceedings, and pursuit of its claim against CMC should not be detracted by the claim by RVWSB, which can be pressed in separate proceedings,” Justice Tuiyott said.
The agency had sought to join the case, arguing that it owns 17 of the vehicles. It further said that a consent filed in court in 2019 freezing the vehicles was procured by way of fraud or mistake, and ought to be set aside.
The agency said it contracted the Italian company to construct the dam.
Documents filed in court indicate that it was agreed that RVWSB would purchase the 17 vehicles, which were to be registered in the name of the Italian company but would be returned to the agency once the project was completed.
The agency, spent Sh82.5 million, maintains that the vehicles do not belong to CMC.
The Italian company used the motor vehicles to secure a financing agreement with Absa in May 23, 2017 without its consent or knowledge, RVWSB said.
For its part, Absa said the Italian company approached it in 2017 and 2018 for various financial facilities, including asset financing, short-term loan/overdrafts, working capital and bank guarantees.
The bank, through lawyer Kamau Karori, said it loaned CMC Sh585 million for the purchase of 98 vehicles and equipment to be used in the dam project.
The Directorate of Criminal Investigations (DCI) had also sought to seize the vehicles but Absa objected, saying the agency was confusing the Itare Dam project with the other scandal-ridden Kimwarer dams in Elgeyo-Marwakwet County.
Documents filed in court by the DCI indicate that Sh160 million of the dam’s project money was paid to Toyota Kenya for 45 vehicles ranging from Prados, Fortuners, Corollas, Hiace vans and pick-up trucks.
But only 17 of the vehicles were registered to CMC. The Italian firm through its chairman Alfredo Fioretti admitted the debt and default.
CMC, however, contends that it finds itself in default because RVWSB failed to pay it some Sh335.1 million in relation to works on the Itare Dam project.