Mhasibu Sacco subsidiary slapped with Sh100 million bill

An architectural firm hired to oversee the construction of multi-storey twin towers wants Mhasibu Sacco investigated for failing to settle a Sh99.62 million services fee.

The petition was made by lead consultant at M & R Consult to the Commissioner of Co-operatives, public records show.

The subsidiary, Mhasibu Properties Limited (MPL), is a limited company that was formed in November 2012 by Mhasibu Sacco as a special purpose vehicle for investment in properties. As of September 2018, the sacco held 87.5 per cent of the total shareholding while minority shareholders had a 12.5 per cent stake in MPL.

“M & R submitted demand notes on May 29, 2017 for Sh64.16 million that was not acknowledged. M & R has increased the claim to recognise accrued interest of Sh35.46 million pushing the amount to Sh99.6 million,” says the forensic audit report presented to members last Saturday.

M & R was the lead consultant representing a consortium: Kanjumba for quantity services, Varsitech for mechanical and electrical engineers as well as structural and civil engineers, Metrix Integrated.

MPL planned to put up the twin towers, 12 and nine storeys respectively, on a Sh123.8 million developed property along Kirichwa Road, Nairobi. This saw members approve formation of a special investment vehicle, Mhasibu Properties Ltd (MPL).

But board changes adversely affected the planned development meant to be funded via a mix of equity and debt, resulting in cancellation of the contract awarded to Jinsing Enterprises, which had agreed to fund and put up the building.

In the forensic report read out Saturday, the new board claimed Jinsing was irregularly awarded the contract despite other companies, Dinesh, Italbuild, Seyani Brothers and Epco, putting in bids.

“Through perusal of various previous minutes, it was noted consistently that Jinsing was engaged even before contracts were awarded. The (new) board also noted that Jinsing quoted Sh658,763,016, quite close to MPL’s Bill of Quantity amount of Sh659,348,068,” it says.

After the cancellation, Jinsing moved to file a dispute for their claim of Sh95 million, being ‘anticipated profits’ adding that it opted to pursue arbitration.

Jinsing’s and M & R’s claims are awaiting outcome of arbitrations filed before different panels.

Editor's Note: This story has been modified to reflect that the entity in question is Mhasibu Properties Limited (MPL), a subsidiary of Mhasibu Sacco.