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GT Bank puts Njenga Karume’s Jacaranda Hotel on auction

Jacarada Hotel in Nairobi
Jacarada Hotel in Nairobi on July 9, 2019. The hotel has been earmarked for sale to recover a Sh257.6 million loan owed to Guaranty Trust Bank. PHOTO | SALATON NJAU | NMG 

The Jacaranda Hotel in Nairobi, which is owned by the family of the late Cabinet minister and business tycoon Njenga Karume, was on Monday put up for auction.

The hotel, which is among the few surviving businesses that the late politician left behind, has been earmarked for sale to recover a Sh257.6 million loan owed to Guaranty Trust Bank.

The four-star hotel, which is in the Westlands suburb, has 128 bedrooms and sits on 3.5 acres of prime land. The auction has been set for January 22.

“Duly instructed by our clients, we shall sell … very prime property in Westlands by public auction,” Regent Auctioneers said in a notice.

The late Karume, a former Defence minister in the then President Mwai Kibaki's government, died seven years ago, leaving behind multibillion-shilling properties.

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The businessman had, however, also accumulated a debt load that his family and a board of trustees he appointed to oversee his estate have struggled to clear. A vicious fight for the control of the business empire pitting the tycoon’s children and the trustees has also derailed the estate.

BANK LOAN

In his prime, Karume was the biggest distributor of beer maker East African Breweries Limited’s #ticker:EABL products, a lucrative, long-term contract that earned him billions of shillings over the years.

One of the trustees, Kung’u Gatabaki, on Monday said they would fight the planned auction, describing the hotel as the jewel of the Karume empire.

“Our lawyers are preparing to go to court and we still believe it will be settled amicably,” Mr Gatabaki said in a phone interview with the Business Daily.

“I can’t say much but you know banks are banks and as lenders they have to take some action to protect their investors. Advertising the property for action means we have not repaid the loan, but it also does not mean that they will sell it tomorrow.”

Regent Auctioneers had in June notified the management of Jacaranda Hotel of the impending auction. The family had opted to sell one of its huge tracts of land under Karume’s name to clear the bank loan. The Business Daily was not in a position to establish how far the family had gone in selling the land.

In 2018, the Kenya Revenue Authority had also lined up auctioneers to recover value added tax (VAT) and pay as you earn (PAYE) arrears amounting to Sh153 million owed by the hotel. The taxman issued Jacaranda Hotels Limited with an enforcement notice on January 12, 2018, seeking immediate payment of tax arrears amounting to Sh197 million and on the same day moved to secure goods at the hotel to recover the tax.

The matter was settled after KRA agreed to a repayment plan of Sh50 million in monthly instalments and payment of Sh7.9 million to auctioneers who had already secured the hotel’s property to recover the tax.

BITTER DISPUTE

Karume’s Village Inn and 11 parcels of land totalling to 111.24 acres at the Kacharoba Farm in Kiambu County were advertised for sale in 2018 in what is said to have caught his children and their lawyers by surprise.

A mediation council chaired by former ambassador Stephen Karau had a hard time trying to quell an imminent family split over the sale of the properties meant to settle Sh2.5 billion debts owed by the estate.

Karume succumbed to cancer in 2012. His estate has been the subject of a bitter dispute between some of his children and trustees, with some of the disputes spilling to the courts.

The latest effort to call a truce through mediation appears to be faltering even as the auctioneer’s hammer looks set to fall on the prized family property that is Jacaranda.

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