The ghosts of financial deals by slain tycoon Jacob Juma have returned to haunt his business partner, Sirisia MP John Walukhe after a court allowed a bank to claim Sh12.2million from the politician for a loan he guaranteed the late businessman.
The High Court allowed the National Bank of Kenya(NBK) to recover the outstanding loan from Mr Walukhe, who is one of the guarantors of the loans borrowed by Juma between 2001 and 2006.
While ruling on the longstanding legal dispute, Justice Alfred Mabeya said the bank had proven its claim against the guarantors and Mr Juma’s trading firm – Juma Construction Company Limited -which was the beneficiary of the loan. The other guarantor being pursued by the bank is Agnetta Simuli.
The judgment indicates that the construction company will pay Sh6.2 million while Mr Walukhe and Ms Simuli will pay Sh3 million each.
The bank filed the case in 2010 seeking to recover a sum of Sh14.2 million. It jointly sued the company together with Mr Juma, his business associates Grace Wakhungu Serapayi, Mr Walukhe, and Ms Simuli.
They had provided different guarantees to secure Sh10 million loan advanced by the bank to the construction company between April 2001 and June 2006.
Ms Wakhungu had provided the title for her land parcel in Machakos as collateral to secure an amount of Sh7 million and an individual guarantee of Sh3 million. Mr Waluke, Juma, and Ms Simuli had provided joint personal guarantees of Sh3 million each.
“The lending to the company was proved. The bank produced personal guarantees executed by Mr Juma and Ms Simuli. It also produced letters of demand. Its evidence was not rebutted. To the court’s mind, there was sufficient evidence adduced which proved the bank’s case against the defendants,” said Justice Mabeya.
Court papers indicate that the company borrowed the money to provide working capital for the construction business. The debt increased because of the interest.
But it defaulted in repayment and the bank auctioned the land. However, it only recovered Sh2.8 million from the forced sale of the property, leaving a deficit of Sh8.2 million.
This prompted the lender to pursue the guarantors and the construction company to meet the shortfall arising from the sale of the asset.
Justice Mabeya found that Ms Wakhungu had paid her share of the loan amounting to Sh2 million and the case against her was withdrawn in 2012. The case against Mr Juma ended following his death in May 2016.
The judge also blocked the bank from imposing an interest at the rate of 19 percent against the guarantors.
“I have looked at the personal guarantees. There was no provision of any interest on the principal sum guaranteed. Accordingly, the claim by the bank for interest at the rate of 19 percent per annum cannot stand,” said the judge.
In their defence filed in court in June 2010, Mr Juma and the company stated that the bank sold the Machakos land at a gross undervalue hence the lender acted negligently and breached its said duty.
They said in the said sale, the bank owed them a duty to take reasonable precautions and obtain the true market value for the property.
Mr Waluke on his part denied ever executing a personal guarantee or being indebted to the bank as claimed. He averred that he was never notified of any default.
The bank’s Accounts Manager Paul Chelanga, while testifying in court denied the allegations that the property was purchased by any of the lender’s officers.
The court’s order against Mr Walukhe comes at a time he is battling a magistrate court’s judgment that sentenced him and Ms Wakhungu to a combined 136 years in jail for theft of Sh297 million from a State Corporation.
They are also fighting a combined fine of Sh2 billion imposed by the magistrate court in 2020 for alleged ‘supply of air’ to the National Cereals and Produce Board (NCPB).
Interestingly, the maize deal was orchestrated by the slain tycoon. The trio were directors of Erad Supplies & General Contractors Limited, which won a tender to supply 40,000 metric tonnes of white maize in 2004 but ended up supplying nothing.
However, it demanded payments and received the sum of Sh297 million leading to a court battle that is ongoing at the High Court Anti-Corruption division. BY DAILY NATION