Mr Raphael Tuju. FILE PHOTO | NMG
Summary
- East African Development Bank had on December 23 appointed receiver managers—George Weru and Muniu Thoithi— for the Tuju property under Dari Limited to prepare for the sale of its assets to recover the Sh1.53 billion debt.
- EADB accused Dari, where Mr Tuju and his children are directors, of breaching the debt agreement and defaulting on the loan.
- Mr Tuju, who made his wealth from the media business, has invested heavily in real estate.
Jubilee Party Secretary-General Raphael Tuju has launched a
court fight to block the auctioning of his properties over a botched
Sh1.53 billion ($15.6m) loan deal meant for the development of luxury
homes in Nairobi’s Karen suburb.
Mr Tuju will return to
the High Court Friday to know his fate after Justice Maureen Odero
blocked the East African Development Bank (EADB) on December 24 from
operating or selling assets the Cabinet Secretary had used to access the
multi-million dollar loan.
The loans were targeted for
the construction of Sh100 million two storey, flat-roofed bungalows
sitting on a 20-acre forested land dubbed Entim Sidai and purchase of a
94-year-old bungalow built by a Scottish missionary, Dr Albert
Patterson, which currently operates as a high-end restaurant.
But
development of the 12 luxury homes worth Sh1.2 billion has fallen
behind schedule in a business environment where property developers are
finding it difficult to sell units that were built on loans, setting the
stage for defaults and asset seizures.
The
multi-national lender had on December 23 appointed receiver
managers—George Weru and Muniu Thoithi— for the Tuju property under Dari
Limited to prepare for the sale of its assets to recover the Sh1.53
billion debt.
EADB was enforcing the judgment by a London court that ruled
that the Kenyan politician had defaulted on the multi-million dollar
loan, which includes the principal and interest.
AUCTION
Mr
Tuju last week received a seven-day order, which lapses Friday,
stopping the receiver managers from taking over the property, arguing
that EADB was frustrating efforts to have a Dubai-based investor
—ZLivia— invest in the property to make it profitable.
“In
complete disregard of the deliberate efforts by the plaintiffs (the
Tujus) to return the project on profitable trading, the defendant (EADB)
has proceeded to appoint receiver managers over all the assets of the
plaintiff to engage in the sale and realization of the plaintiff assets
and properties as its primary option,” Mr Tuju said in court papers
filed on December 24.
The bank says the debt, which it
advanced on July 31, 2015 at $9.19 million (Sh932.7m), has remained in
default since 2017 when it fell due.
The London court
dismissed Dari Limited’s opposition to the bank’s claim, setting the
stage for the lender to seek enforcement and auction.
The
London court’s documents showed that the restaurant had entered into an
agreement with the bank on April 10, 2015, under which it agreed to
give Dari a $9.3 million (Sh943.9million) loan.
The deal gave the restaurant a 24-month grace period, which fell due in 2017.
COUNTERCLAIM
But
two years later, Dari had failed to pay $1.8 million (Sh186 million) in
interest owed, according to the bank, adding that Mr Tuju had ignored a
notice to clear the debt.
Among the accusations the
defendants, who include the Cabinet Secretary’s children Mano Tuju, Alma
Tuju and Yma Tuju-- faced were breach of agreement and defaulting on
the loan repayment.
EADB accused Dari, where Mr Tuju and his children are directors, of breaching the debt agreement and defaulting on the loan.
The
court also dismissed Dari’s counterclaim, which stated that the
interest rate charged by the bank was a penalty that was not
unenforceable.
The judge disagreed, ruling that it was a standard clause in loan agreements of the type advanced to the hotel.
“The
court is in a position [to conclude] that the rate of default interest
is not penal and that the proposed defence does not have a real prospect
of success,” the judge ruled.
Mr Tuju has opted to
fight his battles in the Kenyan court and accused EADB of breaching
terms of the loan deal, which made it difficult to complete the high-end
real estate project.
First, Mr Tuju accused EADB of
disbursing Sh932.7million instead of the agreed Sh943.9 million, adding
that the bank had reneged on the plan to offer Sh294 million for
building the luxury homes for sale.
The bank directly
paid the Sh932.7 million to the owner of the 94-year-old bungalow
sitting on the 20 acres, and demanded that Mr Tuju provide additional
security for construction of the Sh100 million bungalows.
“Having
failed to disburse the balance of $102, 916 (Sh 10.4million) and
further Sh294 million, the first defendant inevitably experienced cash
flow challenges,” said Mr Tuju.
“EADB is fully aware
that in the absence of the development of the housing units for sale as
envisaged in the project proposal, Dari would not be able to service the
loan facility,” he added.
LUXURY HOMES
The Entim Sidai luxury homes development comprised
five bedroom homes worth Sh100 million each. They have two jacuzzis in
two master bedrooms with a translucent roof that lets in natural light
where families live next to century-old trees and the historic bungalow.
The
Victorian bungalow currently operates as a spa and restaurant with
rooms to let. There is one room for honeymooners that goes for Sh43,000 a
night.
The property has preserved Dr Patterson’s
furniture, wall clock, gramophone, wall clock and a 60-year-old fridge
among other items.
Mr Tuju says that EADB stalled on building the luxury homes. He also accuses EADB of stopping KCB Group
from taking over the loan and derailing equity investments in the deal by Dubai investors.
“The
defendant is frustrating the plaintiff’s efforts to secure alternative
funding thereby clogging the plaintiffs right to redeem the facility,”
he added.
Mr Tuju, who made his wealth from the media business, has invested heavily in real estate.
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