- High Court ruled that that Export-Import Bank of America was time-barred in bringing the suit before judges in October 2010 instead of May 2006.
- Royal Media Services and guarantors of the debt— SK Macharia and Gathoni Macharia — faced a liability of Sh453 million that included interest over two decade the loan was in default.
- The bank was seeking to recover $486, 283 (Sh51.1 million) from RMS and the guarantors for defaulting on the loan borrowed in 1998 and went into default in 1999.
Tycoon and Citizen TV owner Samuel Kamau (SK) Macharia has escaped repaying a multimillion-shilling loan owed to a US-based financier after the High Court ruled that Export-Import Bank of America debt recovery suit was time-barred.
High Court ruled that the lender was time-barred in bringing the suit before judges in October 2010 instead of May 2006 in line with the law that demand such cases be heard within six years.
Royal Media Services (RMS) and guarantors of the debt— Mr Macharia and his wife Gathoni Macharia — faced a liability of Sh453 million that included interest over two decade the loan was in default.
The bank was seeking to recover $486, 283 (Sh51.1 million) from RMS and the guarantors for defaulting on the loan borrowed in 1998 and went into default in 1999.
Royal Media tapped the debt from Sentry Finance Corporation (SFC) for purchase of various television, radio and paging transmission equipment and Export-Import Bank of America offered insurance to repay the loan should it be defaulted.
Court documents show the debt was defaulted in mid-1999 after payment of $9,319 (Sh978, 495) by RMS, forcing Export-Import Bank of America to repay SFC and later demand the millions of shillings from the media firm and its owners.
But Justice Mary Kasango dismissed the claim, saying the suit was time-barred, and cushioned SK Macharia and RMS from refunding Export-Import Bank of America legal costs.
“Ex-Imp Bank slept on its rights and then brought this case after an unreasonable delay. Statute expects parties to be reasonably diligent in enforcing their rights before court,” said Justice Kasango.
“If indeed I had found that this claim is not statute-barred I would have entered judgment for the admitted amount of $447,943.02 (Sh47.1 million) less the paid amount of $9,319.15 (Sh978, 495) plus interest.”
This would have seen SK Macharia and his wife face liability of Sh453 million if court interest of about 12 percent is factored for 20 years the debt has been in default.
Justice Kasango reckons that SFC and Export-Import Bank of America failed to register the TV equipment as security in line with the loan contract, making it difficult to seize and auction RMs equipment.
RMS said the SFC breached terms of the loan deal by delaying delivery of the TV equipment.