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Telkom bosses face prosecution over Sh14bn land suit

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Telkom CEO Mugo Kibati. FILE PHOTO | NMG

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Summary

  • Postel Housing Co-operative Society has been allowed to privately prosecute senior officials of Telkom Kenya including chief executive Mugo Kibati.
  • Senior principal magistrate Kennedy Cheruiyot allowed the former employees to bring charges against Telkom directors, some of whom have already left the company.

Postel Housing Co-operative Society has been allowed to privately prosecute senior officials of Telkom Kenya including chief executive Mugo Kibati over the sale of Sh14 billion land on Ngong Road in Nairobi.

Senior principal magistrate Kennedy Cheruiyot allowed the former employees to bring charges against Telkom directors, some of whom have already left the company, after accusing the Director of Public Prosecutions of failing to take up the matter despite being notified of the alleged fraud.

“I find that this application fits the criteria for a private prosecution as it has been demonstrated that reports were made to the DCI and DPP from October 5 last year setting out the complaint by the sacco members but declined to take action in the matter having had an opportunity to do so,” ruled the magistrate.

The group led by their officials Henry Belsoi have been seeking to privately prosecute former CEO Michael Ghossein, for board secretary Lois Allella, Mr Kibati and Dorcas Kombo (director), among others, over the sale of the land, which is also being claimed by businessman Francis Mburu.

The dispute stems from a parcel of land on Ngong Road, which has since been compulsorily acquired by the government and is building a sports facility.

The group says they are more than 300 staff formerly employed by the defunct Kenya Posts and Telecommunications Corporation (KPTC). They claimed that they paid to acquired 60 acres of the 79-acre parcel of land in the 1990s.

The amounts, they claimed were deducted through check-off from the payslip after agreeing to purchase the land for Sh350,000 per acre. Mr Belsoi said Postel members contributed well over Sh23 million before the contributions were halted.

They later approached a developer, named Exclusive Estates Limited to develop residential houses but the project stalled in 1995. Later in 2009, Mr Mburu’s company claimed that Postel had assigned its interest to Exclusive Ltd.

The matter headed to court but the parties were referred to arbitration and in 2019, the arbitrator — Zehrabanu Janmohammed — said the three contracts entered between parties starting 1993, were enforceable.

The first contract was entered between KPTC and Postel for the sale of 60 acres of the land on Ngong Road for Sh21 million, while the second contract was between Postel and Exclusive for the housing project. The third agreement was entered in January 2009, between Postel and Exclusive with the former allegedly assigning its interest in the property to Exclusive.

Ms Janmohamed had directed Telkom to subdivide the land within 90 days and for Exclusive to pay Sh21 million for the parcel.

But Telkom Kenya through Mr Kamau Karori challenged the decision, arguing that the award improperly conferred the land to Exclusive for a paltry Sh21 million yet the land is worth Sh6 billion, according to a valuation conducted by a firm commissioned by Telkom.

The group alleges that Telkom sold the land to AFTRACO for Sh1.5 billion, in a deal they said was fraudulent.

“There is no doubt that the said action of purporting to sell the said parcel of land to a third party amounts to outright commission of fraud on their part and the part of the Telkom Kenya board,” Mr Belsoi said in an affidavit.