Reprieve for Moi era contractor as court orders banks to keep off

Corporate News

Construction on a section of the Voi-Mwatate Road. Kundan Singh had taken a Sh2.2bn loan for construction of the motorway. PHOTO | FILE 

By BRIAN WASUNA, bwasuna@ke.nationmedia.com

In Summary

• The High Court issued the orders following a disputed attempt to withdraw a suit filed by Kundan Singh’s owners challenging the receivership.
• BoA, KCB and I&M Bank last year appointed Kolluri Kamasatry alongside Deloitte’s Harveen Gadhoke and Samuel Oketch Onyango as receiver managers.
• The firm owes them a combined Sh7.1 billion it borrowed to finance operations.

The High Court has temporarily stopped receiver managers appointed by the Bank of Africa (BoA), KCB and I&M Bank from interfering with the operations of the collapsed Kundan Singh International—a construction firm that grew and thrived in the Moi era.

Justice Charles Kariuki issued the orders following a disputed attempt to withdraw a suit filed by Kundan Singh’s owners challenging the receivership.

Kundan Singh went into receivership just months after the Ethics and Anti-Corruption Commission (EACC) accused it of colluding with Michael Kamau, the former Transport Cabinet Secretary, to alter designs for the Sh2.6 billion Kaptana-Kapsokwony-Sirisia road with the aim of stealing project funds.

The firm filed the application after the law firm representing the receiver managers—Walker Kontos—filed documents in court claiming to also represent the construction firm.

Walker Kontos also filed documents claiming Kundan Singh had withdrawn from the suit challenging the receivership. But the firm’s owners hold that the alleged appointment of Walker Kontos to represent them and withdraw the suit is an attempt by the receivers to sabotage their suit.

BoA, KCB and I&M Bank last year appointed Kolluri Kamasatry alongside Deloitte’s Harveen Gadhoke and Samuel Oketch Onyango as receiver managers. The firm owes them a combined Sh7.1 billion it borrowed to finance operations.

“Kolluri Kamasatry, Deloitte Consulting Limited, Samuel Oketch Onyango and Harveen Gadhoke are hereby restrained from forthwith interfering with Kundan Singh International’s conduct in the suit and from continuing to exercise control over the running of Kundan Singh or from selling the assets of Kundan Singh’s assets until further directions,” the judge ordered.

The receiver managers are yet to respond to the suit.

The contractor borrowed colossal sums to secure funding for the multibillion-shilling construction projects it had won, including the Bura Irrigation Scheme (Sh7.3 billion), the Voi-Mwatate road (Sh2.2 billion) and the New Songwe International Airport in Mbeya, Tanzania (Sh1.8 billion).

READ: Toyota firm joins list of creditors seeking auction of Moi-era contractor

Kundan Singh is also fighting off a Sh226 million claim from the Kenya Revenue Authority for alleged unpaid levies between 2010 and 2015.
The High Court has in a separate case stopped the taxman from auctioning Kundan Singh’s assets until the suit is determined.

Kundan Singh is also fighting Tsusho Capital—a subsidiary of Toyota Kenya—in court over a defaulted car loan of Sh7.2 million.

Walker Kontos had stated in court filings that it was replacing Gichuki King’ara & Company Advocates.

Kundan Singh’s owners added that allowing Walker Kontos to represent the company would be greenlighting a conflict of interest as the law firm is already defending the receiver managers in the same suit.

“The actions by Walker Kontos amount to contempt of this court and are an abuse of the lawful process, and an attempt by the defendants to frustrate Kundan Singh International by sabotaging its case thus driving it away from the seat of justice through the back door,” the construction firm’s owners say.