Economy

Nginyo children risk jail in Sh4bn estate fallout

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The late businessman Nginyo Kariuki. FILE PHOTO | NMG

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Summary

  • Mr Kariuki died on February 24,2020, leaving a vast estate, including real estate, farming, bank deposits and government bonds and a will that is being contested.
  • Before 4 obtaining approval to run the estate, Margaret and her children started withdrawing money from the deceased’s bank accounts.

The widow and children of the late businessman Lawrence Nginyo Kariuki risk fines and jail terms after the High Court declared that they had appropriated part of his assets before receiving permission to manage the estate.

The court has also ordered a forensic audit of the Sh4 billion estate after Margaret Wangari Nginyo and some of her six children, including Jane Alice Wambui Kiragu and Silas Macharia Kariuki, withdrew more than Sh70 million from the deceased’s bank accounts at I&M Bank and Consolidated Bank of Kenya.

Mr Kariuki died on February 24,2020, leaving a vast estate, including real estate, farming, bank deposits and government bonds and a will that is being contested in court by three children he bore out of wedlock -- Brenda Nyambura, Alex Ndoria and Austine Wachira.

Before 4 obtaining approval to run the estate, Margaret and her children started withdrawing money from the deceased’s bank accounts.

In one instance on March 10, 2020, they applied for and transferred Sh1.1 million from the deceased’s bank account at Consolidated Bank of Kenya.

They have stated that the cash has been used to pay legitimate expenses, including settling debts of the estate and funding his funeral.

But in a judgment delivered Tuesday, Justice Stella Mutuku said the transactions were illegal because the will has been contested, exposing the three to potential legal action.

“Without authority to support their actions, I am constrained to make a finding that the acts by the executors or respondents in dealing with the estate as they did, amounts to intermeddling in the estate of the deceased,” the judge said.

“There was nothing standing in the way of the respondents to move to court to seek the authority they required to deal with the estate of the deceased as they waited for the contested issues to be resolved.”

A person who is found guilty of illegally appropriating the property of the deceased faces a fine not exceeding Sh10,000 or a term of imprisonment not exceeding one year or both.

Justice Mutuku ordered the three to account for the money they had withdrawn from bank accounts of the estate or return the cash. The judge also ordered a forensic audit of all the assets Mr Kariuki left behind.

“That failure to account as ordered… the respondents shall refund to the estate all and any of the proceeds they have withdrawn from the deceased’s accounts and or misappropriated from the entire estate,” say the orders.

“That this honourable court hereby orders that a forensic audit of the deceased’s estate since his demise to be conducted by an audit firm to be agreed upon by all the beneficiaries herein failing which the court to appoint one.”

Preliminary court records show that the deceased owned land and buildings in Nairobi, Kiambu and Ngong valued at a total of Sh3.2 billion. His most famous property is Nginyo Towers in Nairobi’s central business district.

He owned a 120-acre farmland in Tigoni, Kiambu County, producing coffee, tea and livestock. The farm has monthly expenses of Sh1.7 million per month and makes a small profit.

Mr Kariuki had a total of Sh335 million in fixed deposit accounts, with most of the cash parked at Consolidated Bank of Kenya.

His investment firms, including Nginyo Investments and Pema Holdings, have assets of Sh221.3 million.

He had also invested Sh84.1 million in government bonds generating an annual interest income of Sh9.4 million.

Mr Kariuki owned shares in a few Nairobi Securities Exchange-listed firms such as East African Breweries Limited (EABL) with a market value of more than Sh10 million.

He owned several luxury cars and farm machinery valued at Sh33.1 million, including a Toyota Landcruiser and Mercedes Benz.

Mr Kariuki’s estate has minimal debt and has significant liquidity, with cash and cash equivalents representing about 10.5 percent of the total assets.

The court case threatens to freeze the deceased’s estate that would leave the heirs with nearly Sh400 million each, assuming equal distribution to Margaret and the nine children.

Brenda was the first to file an application objecting to the will, which listed Margaret and her six children as the only heirs.

Through the law firm of Murage Juma and Company Advocates, Brenda sued lenders— Consolidated Bank, I&M Bank and Co-operative Bank — over hundreds of millions of shillings in accounts and for offering Margaret’s children access to the finances without letters of administration.

“Not only does the alleged will not name, mention and or list three of the deceased’s children Alex Ndoria Karuri, Austin Wachira Karungo and objector herein, it does not provide anything for them,” Brenda said in her objection to the grant of letters of administration.

“This proves that the deceased was not of his free mind as the deceased did not know and/or could not remember the other three children who are not children of Margaret Wangari Nginyo Kariuki at the time of making the alleged will but only remembered all the children of Margaret Wangari Nginyo to the exclusion of all others.”

Mr Kariuki had a long history in politics, with his most prominent role coming in 2000 when he founded and became chairman of The National Alliance (TNA) party.

The party was President Uhuru Kenyatta’s vehicle to power in 2013. It was later dissolved in 2016 when it merged with others, including the United Republican Party (URP), to form the ruling Jubilee Party.

Mr Kariuki failed to clinch several electoral offices, including the Kiambu Senate seat in 2017.

He was more successful in business, amassing a fortune that places his heirs among the richest families in the country.