A firm linked to Jubilee Party Secretary-General Raphael Tuju has been placed under receivership over a Sh1.6 billion bank loan in a suit that saw the High Court stop the auction of the politician’s Karen property.
Justice Grace Nzioka on Monday allowed receiver managers to run Tuju’s firm, Dari Limited, arguing it was not possible for the receivers and directors of the firm to run the company together.
East African Development Bank (EADB) had appointed Muniu Thoithi and George Weru as receiver managers on December 23, 2019 to manage Dari Ltd in Karen over the unpaid loan, but Mr Tuju opposed the move. He argued that the takeover was a bid to frustrate his plan of repaying the debt.
He argued that the receivers were keen to auction the multimillion-shilling Karen property linked to Dari Limited, which is said to be worth Sh1.8 billion.
Among the accusations Mr Tuju and his children -- Mano Tuju, Alma Tuju and Yma Tuju-- faced were breach of agreement and defaulting on the loan repayment.
EADB accused Dari, where Mr Tuju and his children are directors, of breaching the debt agreement and defaulting on the loan.
On Monday, Justice Nzioka blocked the receiver managers from auctioning the Karen property, pending conclusion of the debt suit.
This means the Tujus will cede control of Dari Limited to the receiver managers at a moment when Cabinet Secretary is recovering at a London hospital after being involved in a road accident while on his way to Kabarak to attend the burial of former President Daniel arap Moi.
EADB is demanding Sh1.6 billion from Tuju following a botched loan deal.
The loans were targeted for the construction of Sh100 million two storey, flat-roofed bungalows sitting on a 20-acre forested land dubbed Entim Sidai and purchase of a 94-year-old bungalow built by a Scottish missionary, Dr Albert Patterson, which currently operates as a high-end restaurant.
But development of the 12 luxury homes worth Sh1.2 billion has fallen behind schedule, setting the stage for defaults and asset seizures.
Through lawyer Paul Nyamodi, Mr Tuju blamed the bank for the delayed construction of the homes after the lender declined to provide additional millions for building the luxury houses in breach of the loan agreement.
Mr Tuju accused EADB of disbursing Sh932.7 million instead of the agreed Sh943.9 million, adding that the bank had reneged on a plan to offer Sh294 million for building the luxury homes for sale.
“EADB is fully aware that in the absence of the development of the housing units for sale as envisaged in the project proposal, Dari would not be able to service the loan facility,” he added.
He also accuses EADB of stopping KCB Group from taking over the loan and derailing equity investments in the deal by Dubai investors.
But in his UK judgment, Judge Danie Toledano said the bank was under no obligation to lend the additional Sh294 million.
The Kenyan courts have already accepted the UK judgment.
The bank says the debt, which it had advanced on July 31, 2015 at $9.19 million (Sh932.7m), has remained in default since 2017 when it fell due.
The London court dismissed Dari Limited’s opposition to the bank’s claim, setting the stage for the lender to seek enforcement and auction.
The UK court’s documents showed that the restaurant had entered into an agreement with the bank on April 10, 2015, under which it agreed to give Dari a $9.3 million (Sh943.9 million) loan.
The deal gave the restaurant a 24-month grace period, which fell due in 2017. But two years later, Dari had failed to pay $1.8 million (Sh186 million) in interest owed, according to the bank, adding that Mr Tuju had ignored a notice to clear the debt.
Mr Tuju, who made his wealth from the media business, has invested heavily in real estate.