Cry of the rich: Karume’s children battle estate trustees

enga Karume installed as a Kikuyu elder at Mukurwe wa Nyagathanga, Murang'a County. Mr Karume died a wealthy man. FILE PHOTO | RAPHAEL NJOROGE  

In Summary

• Njenga Karume had put all his wealth under three holding companies that were to be managed by the Njenga Karume Trust.
• The trustees have been accused of contributing to the diminishing of the income from assets under the Trust

By WANJOHI GITHAE
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The inspiring story of Njenga Karume’s rise ‘from charcoal to gold’ is swiftly, and sadly, turning into a story of an empire hurtling down from gold to ashes.

Njenga Karume died a wealthy man. He had real estate, shares in multiple companies and various other investments worth billions of shillings.

And then some more in the bank.

But since 2015, the children of the late patriarch and the trustees he entrusted to manage his vast estate have been embroiled in a bitter court battle at the High Court in Nairobi.

READ: Njenga Karume's children lying, say trustees

READ: Rich families in court battles over Sh500bn wealth

WEALTH MANAGEMENT
Just before he succumbed to cancer on February 24, 2012, the former Cabinet minister had put all his wealth under three holding companies that were to be managed by the Njenga Karume Trust, which is under the trustees.

The trustees were to see to it that all financial needs of the beneficiaries, who included his widow, children and grandchildren, were catered for.

They also had clear instructions on how the proceeds from his businesses would be managed.

But some of his children say their father’s will has not been honoured, and numerous court appearances later, there has been more tears and bitterness than joy. The case drags on in court.

CANCER
On Tuesday, January 23, 2018, just before noon, the Karume family trooped to the High Court in Nairobi for another hearing in a case pitting his children and the trustees.

Something extraordinary happened.

Twenty-four-year-old Michelle Wariara Karume raised her hand softly and pleaded to address the court.

Lady Justice Roselyn Aburili gave her the nod and she narrated to the silent court how it had become nearly impossible for her to access medication since the trustees had held on to the money.

MEDICATION

Ms Wariara has cancer. And it requires constant medical attention and sustained medication to manage.

“On several occasions, the Trust has delayed or declined to make proper arrangements for payments for travelling, accommodation and medical expenses even after I incessantly requested for the money from the trust through its chair.

"Due to the laxity by the Trust in making timely payments knowing full well of my deteriorating health condition, I have missed out on important and critical check-ups and medication that is needed for my recovery,” she told court.

The mother of one said she cannot even fend for her son due to her condition.

JACARANDA HOTEL
The court was also informed that she needed emergency funds to travel abroad for check-up.

Just before her plea to the court, her aunt, Jane Mukuhi, who is Karume’s daughter, had also addressed the court.

She said that she had reliably learnt that the family premier business, Jacaranda Hotel, situated in Westlands, Nairobi, was on the verge of being auctioned.

She said auctioneers had already given notice to the hotel on behalf of Kenya Revenue Authority over unpaid taxes.

She also stated that her daughter had missed school due to failure by the trustees to pay fees.

TRUSTEES
The trustees are Mr George Ngugi Warieri, Mr Kung’u Gatabaki and Mrs Margaret Nduta Kamithi.

The trio has been accused of contributing to the diminishing of the income from assets under the Trust, which is the umbrella body that holds his vast estate running into billions of shillings.

In his will, the former minister had decreed that all his eight children and their offspring should benefit from the trust.

The court had earlier granted the children a reprieve when it ordered the trustees not to sell any property registered under the trust.

EXPENSES
After numerous court appearances with no end, the court granted the trustees an approval to sell one of the properties to offset a myriad of bills that included school fees and medical bills for the children and grandchildren.

On July 2016, Justice Aburili directed that the court would approve and supervise the sale of a portion of 616 acres of Kacharoba Estate located in Kiambu County, whose proceeds would be used to meet “medical expenses for the beneficiaries, maintenance of individual beneficiaries, education expenses and such other agreed expenses of the trust including beneficiaries expenses.”

Forty acres of the farm was finally sold for a staggering Sh357,500,000 with 214 million having been received by the trustees for disbursement as ordered by the court.

The children attended court on January 17, 2018 and complained through their lawyers that the trustees had failed to disclose how much they had received from the sale and how they had utilised the funds.

MONEY APPROPRIATION

The court directed the Trustees to file a compliance affidavit explaining how they had utilised the funds received.

On January 23, the trustees finally filed a compliance affidavit signed by the chairman of the Trust, Mr George Waireri, on the sale of the said land when it was revealed that he and fellow trustee, Mr Gatabaki, had paid themselves Sh19,642,857 as “responsibility allowances in the period between March 2015 and December 2017”.

A further Sh17,153,572 was shared among the trustees, Mr Waireri, Mr Gatabaki and Ms Kamithi together with Mr Raymond Njenga and Ms Grace Njenga for sittings on various dates between March 2015 and December 2017.

Mr Njenga is one of the will executors and the late Karume’s cousin.

CONSULTANCY

Grace is Karume’s widow. Mr Waireri is paid Sh100,000 for each trustee meeting while the rest get Sh75,000 per sitting.

The compliance affidavit also disclosed that Grandeur Consulting was hired for accounting consultancy and paid Sh12,527,000 for services rendered between August 2016 and December 2017.

Grandeur Consulting was said to have been paid a further sum of Sh5,104,000 for valuation services.

However the same affidavit disclosed that a modest Sh2,603,457 was spent on beneficiaries’ education shared among eight grandchildren and great grandchildren of the late Karume.

KRA
A further Sh7,947,000 was spent on beneficiaries medical expenses as well as money advanced to the trust by Mrs Kamithi and a law firm representing the trustees.

And as part of offsetting the huge bill owed to Kenya Revenue Authority and alluded to court by Ms Mukuhi, a sum of Sh37 million was advanced to Jacaranda Holdings Limited.

In 2015, three children – Albert Kigera Karume, Samuel Karume and Lucy Karume - moved to court to have the trustees replaced.

In his affidavit, Mr Kigera outlined the vast business empire left behind by the late Karume comprising real estate, hospitality, agriculture and other business interests.

COURT CASE
The late Karume had initially appointed Court of Appeal judge Paul Kihara Kariuki as the chairman of the Trust but he resigned shortly after the demise of the former minister.

“After the resignation of Justice Paul Kihara Kariuki as a trustee of the Njenga Karume Trust, the then or existing trustees of the Njenga Karume Trust failed to adhere to the intention and wishes of the founder by refusing to consider any of the beneficiaries of the Trust. 

"However, the then existing trustees opted to appoint Mr George Ngugi Waireri, as the new trustee and also appointed him as the chairman of the Trust without any notice or reference to the beneficiaries under the Trust,” Mr Kigera laments in his affidavit.

The children also dispute Mrs Kamithi’s appointment as a trustee.

The parties are now preparing closing submissions before the court renders its judgment.