Late politician Njenga Karume’s multibillion shilling estate is staring at collapse due to heavy debts, with Jacaranda Hotel now lined up for auction.
The auctioneer’s hammer is set to fall on the four-star hotel that stands on 3.5 acres in Westlands, Nairobi, after Monday’s advertisement, which set the sell date as January 22.
The hotel is among the last assets the politician left in the hands of trustees when he succumbed to cancer in February 2012.
Guaranty Trust Bank put the hotel on sale through Regent Auctioneers, months after writing to management to inform it of the move meant to recover a Sh257.6 million debt.
Last year, the trustees led by former Capital Markets Authority chairman Kung’u Gatabaki pledged to stop the sale, stating that other properties would be sold to pay the debt, but the deal hit a snag.
HUGE DEBTS
On Monday, Mr Gatabaki maintained that the drive to save the hotel was ongoing.
“Our lawyers are preparing to go to court, but we still believe it will be settled amicably. I can’t say much but banks are banks and as lenders, they have to take some action to protect their investors.
“Advertising the property for sale means we have not repaid the loan but it does not mean that they will sell it tomorrow,” Mr Gatabaki said.
He had earlier termed the hotel “the jewel of the Karume empire” – which would not to be sold “just like that”. That was last July.
The 128-bedroom hotel has a leasehold title deed for a term of 89 years and five months, from July 1973, at an annual land rent of Sh7,845.
The shrewd businessman had accumulated a heavy debt that his family and the board of trustees have struggled to clear.
TAX ARREARS
In his prime, Karume was the biggest distributor of beer maker East African Breweries Limited’s products – a lucrative, long-term contract that earned him billions of shillings over the years.
Regent Auctioneers wrote to the management of Jacaranda Hotel last July, announcing an impending auction to settle a loan of Sh257.6 million.
The auction date was set for July 21 last year but the management pleaded for more time to sell other properties to settle the loan.
A year earlier, Kenya Revenue Authority had also lined up auctioneers to recover value added tax and pay as you earn tax arrears amounting to Sh153 million.
The taxman issued the hotel a notice on January 12, 2018 seeking immediate payment of the arrears and moved to secure goods at the hotel to recover the tax.
FAMILY DISPUTE
The matter was settled after KRA agreed to a repayment plan of Sh50 million per month and a payoff of Sh7.9 million to auctioneers.
Karume’s Village Inn and 11 parcels of land totalling 111.24 acres in Kiambu County were advertised for sale in 2018.
The move caught Karume’s children and their lawyers by surprise and split the family down the middle, making it even more difficult to dispose of some property and settle loans.
A mediation team chaired by former ambassador Stephen Karau had a hard time trying to quell the storm over the sale of properties meant to settle debts – amounting to Sh2.5 billion – owed by the estate.
The estate has been the subject of a legal dispute between some of his children and the trustees.