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Court of Appeal settles Naivas siblings’ dispute

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Naivas Supermarket outlet on Muindi Mbingu Street in Nairobi on this picture taken on Tuesday, June 29, 2020. PHOTO | DENNIS ONSONGO | NMG

The Court of Appeal has settled a family feud that rocked Naivas supermarket after ruling that the eldest of the three brothers who have been fighting a bruising battle for control of the retailer has no stake in the supermarket chain.

A bench of three judges dismissed Newton Kagiri Mukuha and stood with the High Court judgment of 2014 that found that he has no stake in the retail chain, having run down all the stores he inherited from his father.

The court made the decision in a case in which Mr Kagiri had petitioned judges to freeze further share sales in Naivas, wanted a seat on the board of the retailer, asked for a 20 percent stake and additional shares from the 20 percent stake held by his dad, the late Peter Mukuha Kago.

He also sought the deposit of the Sh6 billion, which a consortium of investors paid for a 30 percent stake in the retailer, in an interest-earning joint account.

Mr Kagiri reckoned that he is entitled to a 20 percent stake worth Sh4 billion from his seed capital that established Naivas and the inheritance of his father’s stake.

On Friday, the Judges said Mr Kagiri failed to show how the High Court was wrong when it ruled that he had no stake in Naivas, ending a nine-year family feud that entangled the retailer.

“We believe we have said enough to demonstrate that the appellant’s appeal is without merit and the same is hereby dismissed in its entirety,” Justices Roselyn Nambuye, Fatuma Sichale and Sankale ole Kantai said.

The judges further said Mr Kagiri should take note of a ruling of a High Court judge which found that filing of a flurry of applications over the case amounts to an abuse of the court process and is a perfect example of a party that files repetitive suits to harass an opposing party.

The battle for the control of Naivas was reminiscent of globally famous feuds between the Ambani brothers, Mukesh and Anil –– India’s two wealthiest men — who ended up splitting the massive Reliance Industries empire built by their father, Dhirubhai Ambani.

In the Naivas affair, as in the Ambani family drama, money was the central theme with Mr Kagiri claiming a share of the billions of shillings that Naivas received for share sales and a stake worth Sh4 billion.

The Court of Appeal said Mr Kagiri has never appealed against Justice Anyara Emukule’s High Court judgment.

“How then can he turn around and say that the Court (Emukule, J.) could not issue the orders that were issued on 31st October 2014? We think the appellant is blowing hot and cold, a situation we are not prepared to countenance,” the judges said.

In 2014, Justice Emukule found that Naivas had ceased to be a family business in 1999 when assets that the late Kago – the father of the warring siblings – had accumulated were shared among his children.

Court documents show that October 31, 1999, is the day the Mukuha family decided to share the family assets partly to end squabbles Mr Kagiri had sparked over the multi-million shilling business empire. Mr Kagiri was offered the Rongai store and a house.

His younger brother, Simon Gachwe and sister, Grace Wambui, were given a house and the Elburgon store while David Kimani and his sister, Linet Wairimu, took over the Naivasha business.

Mr Kimani and Mr Gachwe later teamed up to run the Naivasha business and ultimately grew the supermarket into the retail giant that is Naivas.

The two brothers later offered their two sisters a 15 percent stake each and a 20 percent ownership to their father, Mr Mukuha. Mr Kimani and Mr Gachwe had a 25 percent stake each in Naivas, in an ownership structure that changed after the retailers sold a 30 percent stake for Sh6 billion.

Naivas received the Sh6 billion from the International Finance Corporation (IFC), private equity firms Amethis and MCB Equity Fund and German sovereign wealth fund DEG for the minority stake, with the deal set to fuel Naivas’ expansion across the country.

The new capital injection in Naivas is earmarked for expansion in the highly competitive supermarket business that has attracted major players, including the Majid Al Futtaim-backed Carrefour franchise as well as South Africa’s Game and Shoprite, which has since exited Kenya.

Naivas has maintained that family feud has little influence on its operations, terming Mr Kagiri a stranger to the retail chain that has been on an expansion trail in recent months.

“We are elated that our store openings have been greatly enhanced through the support of our stakeholders and investors who have strengthened and improved corporate governance, increased accountability and professionalism within the business,” Naivas chief commercial officer Willy Kimani said in a statement.

Naivas has more than 75 stores across Kenya, up from 26 stores in 2013.

Mr Kagiri said he had sought court intervention after his siblings, led by Mr Gachwe and Mr Kimani, excluded him from owning a piece of the retail chain. At the appeals court, he pushed for nullification of Naivas shareholding based on court records from his siblings, and the recognition that Naivas was a product of Rongai Self-Service Store.

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