The mother of political activist Tony Gachoka has sued him for illegally using the family home to secure a Sh45 million loan from collapsed Trust Bank.
Margaret Njeri Muiruri wants the High Court to revoke Trust Bank’s sale of the Thika home, claiming that her son colluded with collapsed Trust Bank’s owners and Phoenix Aviation general manager Shaun Warren Baretto to defraud her family of the property.
Mr Gachoka used the family home as security for the loan he obtained from Trust Bank 24 years ago and went ahead to default on the facility, causing the bank to auction it.
The home was registered to Central Kenya Limited, a company Mrs Muiruri co-founded with her late husband Joseph Muiruri Gachoka.
Mrs Muiruri incorporated her children in the company following her husband’s death in 1988. Mr Gachoka became a director of the company the same year his father died and took the Sh45 million loan in 1993 at the age of 23. He is yet to respond to the suit.
Mrs Muiruri told the court that the home had been charged to the Agricultural Finance Corporation (AFC) for a Sh3 million loan and that she had asked her son to liaise with AFC in 1993 to clear the loan and free up the title deed.
Mr Gachoka is accused of settling the loan and getting the title deed, which he then used to obtain a Sh45 million loan from Trust Bank. The Sh45 million he borrowed was deposited in Katka Islands Limited’s account -- a firm he incorporated alone.
“Central Kenya Limited has never, through its directors or otherwise, resolved or authorised any of its directors to execute a charge of the suit land in favour of Trust Bank and Trust Finance Limited to secure the sums of Sh15 million and Sh30 million. The charges were therefore invalid, null and void for want of execution,” Mrs Muiruri says.
Following defaults on the loan, Trust Bank auctioned the land to Floriculture International Limited in a deal Mrs Muiruri now says was foul.
She argues that at the time, Trust Bank founder Ajay Shah was also a majority shareholder in Floriculture International.
Floriculture International bought the land and developments on it for Sh60 million on May 2, 1995, an amount Mrs Muiruri now holds was less than half of its true value.
Mrs Muiruri says Floriculture bought the land only two days after it was incorporated. But the flower firm says it lawfully bought the land and charged it to First National Finance Limited three days after acquiring the land for a Sh50 million loan.
Mr Baretto, now the Phoenix Aviation general manager, allegedly executed the charge on the family home as a director of Central Kenya Limited alongside Mr Gachoka.