Kenneth Matiba’s family on Tuesday won a major reprieve after a judge ordered a bank to release Sh440 million secured to protect the interest of a vulture fund entangled in a legal tussle with the businessman.
Commercial Court judge Daniel Musinga said the interim orders earlier obtained by Kenyan-Canadian investor Hanif Sheikh restraining the family from accessing Sh640 million be vacated forthwith.
Mr Sheikh, through Gulf Investments Africa Ltd and Southcote Ltd, claims to have saved Matiba’s property from being auctioned and was seeking close to Sh1 billion from the Alliance Group of Companies.
He argued that he played a major role in reaching a loans servicing agreement with Barclays Bank and in managing the group’s other properties.
Mr Justice Musinga ordered the bank to retain only Sh200 million to secure Sheikh’s interest pending the hearing and disposal of the proceedings.
The judge also directed that all properties belonging to Mr Matiba which have been subject to the court case be preserved until the determination of the arbitration.
The judge also vacated court orders restraining the release of Sh58 million held by Anjarwalla and Khanna Advocates in trust of Ritzenna Ltd.
Sheikh had obtained court orders to stop the Matiba family from selling any of its properties in Nairobi, Naro Moru and Mombasa before an arbitration tribunal had determined the dispute.
The tribunal is to determine the amount of money he is entitled to upon disposal of some of the politician’s charged assets.
The financier moved to court, seeking to enforce a contractual clause that he says entitles him to 27 per cent of the net proceeds after the payment of all outstanding loans.
He says the Matiba family was to receive 36.5 per cent of the proceeds, the same proportion as the family of Stephen Smith, a long time business ally of Matiba in the Alliance Group.
The dispute arose from the Sh1.6 billion sale of Hillcrest Schools in Nairobi and other Matiba properties.
Mr Sheikh says in his affidavit that the Matiba family owes him “Sh886 million plus out of pocket expenses in excess of $100,000 (Sh8.5 million).”
However, Mr Sheikh says the Matiba family offered him only Sh153 million as compensation for his work.
Mr Sheikh also sought to stop the Matiba family from accessing the balance of sale proceeds from the sale of Marborough House for Sh210 million.
Mr Sheikh registered Southcote Ltd and Gulfcap Africa Ltd (later renamed Gulf Investments) as his “special purpose vehicles”.
Mr Sheikh claims to have taken the matter of the sale of Hillcrest Schools to Barclays Bank PLC London expressing the frustrations that he was finding in negotiating with the local bank.
Barclays Bank PLC sent its head of corporate recovery Africa, Paul Gunton who came to Nairobi and visited the Hillcrest Schools’ properties in Karen and State House Road, helping in reaching a resolution.