Uhuru kin takes land battle with KCB to Supreme Court

President Uhuru Kenyatta’s cousin Ngengi Muigai has taken his Sh3 billion land battle against Kenya Commercial Bank to the highest court in the land, seeking to interrogate the way banks exchange information with their customers.

Mr Muigai, who served as an assistant minister in the Moi government, wants the Supreme Court to determine his right as a borrower to access bank records for purposes of reversing the sale of a 443-acre piece of land after he defaulted on a loan.

Through his firm, Muiri Coffee Estate, Mr Muigai is contesting KCB’s 2007 decision to sell the land to Bidii Kenya Limited to recover a loan he took in 1988.

Muiri, through a petition filed in court on Monday, wants the Supreme Court to determine whether a bank can sell property signed off as security before showing the borrower and guarantors a statement of accounts so as to determine the outstanding balance.

“This petition raises matters of general public interest as it raises fundamental matters, including the obligations of a banker to a customer to keep proper cogent accounts and the duty of a chargor to ensure that in realising security, the interests of the party offering the security are upheld,” the petitioner says in court papers.

The matter, whose admissibility the Supreme Court is yet to decide, is expected to attract the attention of financial institutions and borrowers as it could set a precedent for thousands of similar battles being fought in Kenyan courts over loan defaults.

The Court of Appeal, which delivered a judgment in favour of KCB, allowed Muiri Estates to move to the Supreme Court a fortnight ago.

KCB, through lawyer Philip Nyachoti, has opposed Mr Ngengi’s application, insisting that the matter is of contractual nature and does not meet the threshold of public interest as provided for in the Constitution.

READ: Supreme Court to settle Kenyatta kin land matter

The bank further argues that the Court of Appeal was wrong in referring a matter that has been determined several times in the lower courts, to the Supreme Court.

“The Court of Appeal disregarded the fact that all matters touching on the subject were well settled and that there was indeed no grey area of law that had adjudicated upon the decision rendered by the court,” Mr Nyachoti says in his response to Mr Muigai’s petition.

KCB insists that the bank recorded consent with Muiri that was to see its land sold in the event that the borrower defaulted on the loan.

The dispute has its origins in a loan that Benjoh Amalgamated, another company associated with Mr Muigai, took from KCB through a project supported by the United States Agency for International Development (USAid) to encourage entrepreneurship.

Benjoh provided a separate security for the loan with Muiri as the guarantor.

Benjoh claims that it was not presented with a statement of accounts prior to the sale, but KCB maintains that the coffee estate agreed to the sale in the event of a default on the loan.

Muiri has denied the claim, arguing that there was never such consent. The coffee estate wants the Supreme Court to rule that there was never any consent recorded between it and the bank.

Mr Muigai has also accused the bank of grossly undervaluing the land he claims is worth Sh3 billion but was sold at Sh70 million.

Mr Muigai has fought a protracted battle against KCB over the land that has generated a total of 18 suits and countersuits in the High Court and the appellate court.

READ: Court blocks arrest of KCB managers in Kenyatta kin case

Three of the suits are still pending before the High Court while the Court of Appeal still has yet to determine four cases.

Muiri has also faulted the Court of Appeal for allegedly failing to test the interest charged by KCB, as it claims the same was inflated.

The coffee estate claims that the loan interest shot up to Sh44.2 million in 1996 from Sh3.4 million just a year earlier — a jump it claims could not happen with a normal interest charge.

“The Court of Appeal erred in law and in fact and thereby breached the Constitution by failing to put the interest charged by KCB to test, to the detriment of Muiri whose property was unlawfully sold on the basis of unlawful interest,” Mr Muigai says on behalf of the coffee estate.

The Supreme Court has also been asked to determine whether the bank was right in selling Muiri’s land before going after the security registered by Benjoh.

Benjoh had registered a 75-acre piece of land in Nyandarua valued at Sh150 million. Muiri claims KCB was wrong in selling its land before going after the property charged by Benjoh, the borrower.

Muiri has further questioned the bank’s allegation that the land was sold to Bidii Kenya through a public auction.

It reckons that there has been no proof provided to the court regarding the auction, and that the sale could be a conspiracy to defraud the plantation owner of its land.

Mr Muigai says in suit papers that his father, James Muigai, a freedom fighter and brother to Kenya founding president Jomo Kenyatta, acquired the land which he then inherited upon his demise.

He wants the court to nullify any judgments that were issued in other cases on the premise of the alleged consent reached in 1992.

The two petitioners — Muiri and Benjoh — claim they did not instruct their advocate, the late DM Kinyua, to consent to the sale.