Big brother loses as court battle for Naivas ends

Corporate News

Naivas Supermarket branch at Section 58 Estate in Nakuru town. PHOTO | SULEIMAN MBATIAH 

By WANJIRU MACHARIA

In Summary

• The High Court found that Newton Kagiri Mukuha has no stake in the retail chain, having run down all the stores he inherited from his father.
• The court made the decision in a case in which Mr Kagiri had objected to the sale of a 50 per cent stake in Naivas to South African retail chain Massmart, claiming that he was entitled to 20 per cent of the sales proceeds as part of his inheritance.

Newton Kagiri Mukuha, the eldest of the three brothers who have been fighting a bruising battle for control of Naivas Supermarkets, was the biggest loser when it all came to a close last Friday.

The High Court found that Mr Kagiri has no stake in the retail chain, having run down all the stores he inherited from his father.

The court made the decision in a case in which Mr Kagiri had objected to the sale of a 50 per cent stake in Naivas to South African retail chain Massmart, claiming that he was entitled to 20 per cent of the sales proceeds as part of his inheritance.

Justice Anyara Emukule found that Naivas had ceased to be a family business in 1999 when assets that the late Peter Mukuha Kago – the father of the warring siblings – had accumulated were shared among his children.

Court documents show that October 31, 1999 is the day the Mukuha family decided to share the family assets partly to end squabbles Mr Kagiri had sparked over the multi-million shilling business empire. Mr Kagiri was offered the Rongai store and a house.

His younger brother, Simon Gachwe and sister, Grace Wambui, were given a house and the Elburgon store while David Kimani and his sister, Linet Wairimu, took over the Naivasha business.

Mr Kimani and Mr Gachwe later teamed up to run the Naivasha business and ultimately grew the supermarket into the retail giant that is Naivas.

The two brothers later offered their two sisters a 15 per cent stake each and a 20 per cent ownership to their father, Mr Mukuha. Mr Kimani and Mr Gachwe have a 25 per cent stake each in Naivas.

“Clearly, the objector (Kagiri) has no interest, legal or equitable share, in Naivas Limited,” the judge said, adding that the family business originally funded by the joint financial efforts and managed under the name of Rongai Self-Service Store with branches in Rongai, Elburgon and Naivasha had ceased to be a family affair upon the signing by family members of the resolution to share the property on October 31, 1999.

READ: Massmart plans new Nairobi outlet after Naivas deal flops

Justice Emukule found that Mr Kagiri could only lay claim to part of the 20 per cent stake that was allocated to his father given that his suit was hinged on inheritance of the late Mukuha’s wealth.

The fight for control of Naivas went public in November 2012 when Mr Kagiri went to court, seeking orders to stop the sale of the supermarket to Massmart.

Mr Kagiri said he had sought court intervention after his siblings, led by Mr Gachwe and Mr Kimani, excluded him from owning a piece of the retail chain, a move that offered Kenyans a rare peep into the publicity shy family that runs Naivas.

Court documents show the decision angered Mr Kagiri’s brothers who filed a hard-hitting response that branded him a chang’aa trader who had “squandered multiple opportunities” to own shares in the business after he mismanaged Rongai Self Service Store, wjich had been placed under his care.

Naivas, through its chairman Mr Gachwe, argued that Mr Kagiri was a stranger to the retail chain as he was not part of the shareholders.