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Economy

Auctioneers raid Moi associates over bank loans

Former Lugari MP Cyrus Jirongo
Former Lugari MP Cyrus Jirongo (left), retired Africa Inland Church (AIC) Bishop Silas Misoi Yego (centre) and Hosea Kiplagat, a former Cooperative Bank chairman. FILE PHOTO | NMG 

Two more confidants of former President Daniel arap Moi are fighting seizure and auction of their assets over loan defaults, joining the growing list of individuals who rose to prominence during his administration to have fallen on hard times.

Hosea Kiplagat, a former Cooperative Bank chairman, and Retired Africa Inland Church (AIC) Bishop Silas Misoi Yego risk losing property worth millions of shillings in Nairobi and Eldoret after two banks put them up for auction to recover unpaid loans.

They join Moi-era party operatives, cronies and businessmen who have faced debt problems over the past few years, including former Lugari MP Cyrus Jirongo, former spymaster Wilson Boinett, contractor Kundan Singh International and former Co-operatives Development minister John Cheruiyot.

Mr Kiplagat, a nephew of the late Moi and long-serving chairman of the Baringo branch of the previous ruling party Kanu, risks losing his Karen residential home and associated company assets over a Sh378.61 million loan owed to Bank of India.

Mr Yego is also staring at losing his property in Nairobi’s Kileleshwa Estate after he failed stop the sale of the asset in court over Sh143 million owed to Transnational Bank.

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The clergyman was a friend of the late President Moi and led the Africa Inland Church where Kenya’s second president worshipped for many years.

Mr Jirongo, who has fought a string of debt battles, was in 2017 adjudged bankrupt after defaulting on a Sh700 million loan he owed to eight companies.

The declaration was ironical for a man who was previously so awash with cash that the Sh500 note was named after him.

Mr Jirongo’s reputation as a high roller emerged in the 1990s when he headed the YK’92 [Youth for Kanu] lobby group that was funded from government coffers to help Mr Moi retain power in the first election following the re-introduction of multiparty democracy in Kenya.

The politician later went on to win multi-billion shilling construction deals, including development of the Hazina Estate in Nairobi’s South B. He would lose most of his wealth after years of battles with creditors.

Mr Kiplagat’s woes arise from guarantees he had issued in connection with debt taken by two firms – Eldoret Concrete Poles Limited and Timber Treatment Limited.

The public auction of the assets is scheduled to be held between August 25 and 28 by Garam Investments.

The auction targets Mr Kiplagat’s Karen home that sits on five acres and 11 other pieces of land belonging to the two companies.

The two companies obtained the loan on May 14,2018 but have failed to repay the money, prompting Bank of India to auction the securities.

In a public notice, Garam said it would auction the five-acre parcel of land in Nairobi’s Karen area located along Quarry Lane off Bogani Road where an acre of vacant land costs Sh55 million on average.

Mr Kiplagat, who served as the Co-op Bank chairman for a decade before resigning in 2003, has, however, got a temporary reprieve after the defaulting companies obtained court injunction.

Eldoret Concrete Poles and Timber Treatment say that they borrowed the money to boost their working capital and purchase tractors and machinery.

They say in separate court papers that they wrote to Bank of India on March 27, requesting for a three-month grace period after running into Covid-19 headwinds but the lender did not respond.

Through their lawyers, the companies say they have engaged a new financier to take over the loan and therefore the auctions should be stopped.

“The intended sale of the suit premises by public auction is wrongful and if the defendant (Bank of India) is not restrained by an order for injunction, the rights of the plaintiff as chargers' will be grossly violated,” say the lawyers.

The two firms are now counting on the new financier to take over the loan or they face the auctioneer’s hammer.

Mr Kiplagat stands to lose his expansive home, which auctioneers say is double-storey with several multi-purpose rooms.

“It is developed with a three-bedroom (master ensuite) main house complex, son’s two-bedroom guesthouse (one suite), a three bedroom servants’ quarter, a garage and carwash bay,” Garam says in the auction notice. “It has a double-storeyed business room and guest entertainment block, a swimming pool (with fountain) and a baby pool, sauna and steam bath complex (with Jacuzzi), Office block complex, squash complex, three green houses and two beehives.”

Timber Treatment, where Mr Kiplagat served as chairman, risks losing 11 parcels of land designated as industrial-cum-residential properties located within Kenmosa area in Eldoret.

Bishop Yego’s problems come from the money he borrowed from Transnational Bank in 2014 through his trading company Siro Investments to build 50 apartment units.

He failed to service the loan last year, prompting the lender to instruct Purple Royal Auctioneers in April to recover the loan through a public sale.

The clergyman moved to court to challenge the auction saying the bank had undervalued the property and that the outstanding balance was Sh86 million and not the Sh143 million quoted by the lender. He also complained that the bank failed to issue him with the required notification of sale.

But Justice David Majanja ruled that since Bishop Yego admitted the indebtedness, he cannot suffer loss that cannot be compensated by damages.

The judge added that the cleric understood that the bank was entitled to seizure and auction of property upon default.

“According to the correspondence between the parties, the plaintiff has been in default since 2019. He has not met promise to settle the debt despite several offers by the bank to accept settlement,” said Justice Majanja when dismissing the application to restrain the bank from auctioning the property.

The judge said Bishop Yego based his complaint on the fact that he had entered into a sale agreement with a third party who was willing to buy the property at Sh200 million.

Bishop Yego had attached a sale agreement made between him and Peter Kivolonzi who had agreed to purchase the suit property for Sh200 million.

He told the court that the sale derailed in the wake of Covid-19, whose effects had sharply cut sales and reduced appetite for properties.

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