Legal gymnasts or lords of impunity? Inside Kenyatta kin’s fight for 443-acre Thika land
For over 30 years, the intrigues behind a 443-acre land in Thika auctioned by KCB Bank in 2007 have posed a big question: Are its owners, estranged relatives of former President Uhuru Kenyatta, good legal gymnasts or masters of impunity?
Despite losing multiple ownership battles in court and Parliament, Muiri Coffee Estates Ltd, a company owned by two brothers from the larger Kenyatta family, still possesses the prime property.
They have maintained over the years that it was illegally auctioned to a real estate firm.
Barely four months before the 2007 General Election, KCB Bank placed an auction advertisement in the local dailies as it sought to offload a 443-acre coffee farm in rural Thika, Kiambu County.
The land was registered to Muiri Coffee Estates Ltd, which used the property as collateral for a loan taken by another company, Benjoh Amalgamated Ltd. Both companies are owned by Kenya Cultural Centre Council chairperson and Kikuyu Council of Elders patron Kungu Muigai and former Gatundu South MP Ngengi Muigai.
The Muigai brothers are cousins of former President Uhuru Kenyatta.
Benjoh Amalgamated borrowed Sh18 million from KCB Bank in 1989, with Muiri Coffee Estates as its guarantor. But the loan was defaulted and several years later, KCB auctioned the property. In
August, 2007, real estate firm Bidii Kenya Ltd purchased the 443-acre piece of land at an auction after its Sh70 million bid was determined to be the best.
But 16 years later, Bidii Kenyahas never set foot on the land in one of the longest running property disputes in the country’s justice system. In the last three decades, the Muigai brothers have filed 18 cases at the High Court, Court of Appeal and Supreme Court seeking to block or reverse KCB’s auction of the land. They have also filed a National Assembly petition.
All those cases were dismissed, but Muiri Coffee Estates is still in possession of the property. Apart
from ruling that the auction was conducted in line with the law, the courts have ordered the eviction of Muiri Coffee Estates from the property. Bidii Kenya has in the past told judges that attempts to take possession have been thwarted by armed youth allegedly hired by Muiri Coffee Estates in a bid to frustrate justice.
On Tuesday this week, the High Court in Nairobi will mention one of the cases Muiri Coffee Estates and Benjoh Amalgamated filed in 2008. The court will be trying to establish whether an eviction order against Muiri Coffee Estates issued by retired judge Jonathan Havelock in 2014 has been effected.
The eviction order directed police, headed by Thika’s commanding officer, to assist Bidii Kenya in taking possession of the property. Justice Havelock’s order in 2017 became a source of controversy after Thika’s commanding officer was summoned to court over failure to effect it. The contempt of court application filed by Bidii Kenya against the police boss was eventually dismissed.
Every month since February, Bidii Kenya has written to the Attorney-General’s office, seeking assistance with getting police to assist with the eviction. Two weeks ago, the Attorney-General’s office wrote to Bidii Kenya stating that it has not received any communication from Inspector-General Japhet Koome in relation to the property and eviction.
In 1989, the Muigai brothers had big investment dreams that involved putting up a flower farm in Kinangop, a sector that had largely been the preserve of foreigners who, to date, reap billions every year from European exports.
Benjoh Amalgamated, the principal borrower and flower farm proprietor, presented two pieces of land as collateral. The bank demanded additional security, and that is where Muiri Coffee Estates stepped in.
Muiri Coffee Estates’ 443-acre land was sufficient to cover the Sh11.5 million guarantee required to process the release of funds to Benjoh Amalgamated.
The flower farm dream ended in bitter disappointment for the brothers, though, leaving their companies knee-deep in debt and at the mercy of auctioneers sent by KCB to recover the defaulted loan.
In what may have been a politically motivated move, the bank stopped paying for transportation of flowers to the Netherlands, where the Muigais were shipping tonnes of flowers, crippling their ability to export their products.
At the time, Kenya’s economy was in a shambles on account of inflation and big money scandals such as the Goldenberg debacle, coupled with turmoil in the banking sector that saw interest rates fluctuate to highs of over 30 percent in the early 1990s. The in duplum rule in Kenya, which stops addition of interest once it matches principal debt, had also not been introduced. This meant that the defaulted loan would continue to grow into an unscalable mountain.
By the time Kenya introduced the in duplum rule in 2006, KCB had claimed over Sh148 million in both principal amount and accumulated interest. When KCB first listed the loan as defaulted in 1992, Benjoh Amalgamated had repaid approximately Sh6 million.
After declaring the loan defaulted, KCB issued auction notices to Benjoh Amalgamated and Muiri Coffee Estates. The firms filed the first case challenging plans to auction the property. That court file has since gone missing, making it difficult to corroborate the contested course of events. KCB holds that lawyers representing all parties reached an out-of-court deal that would see the loan repaid by the end of July, 1992 and the auction called off.
The consent document was filed before High Court judge Erastus Githinji, who was at the time 43-ears-old. Since then, Justice Githinji has been promoted to the Court of Appeal. He retired in 2019 when he hit the mandatory retirement age for judges, 70 years. Yet the land saga drags on with no end seemingly in sight.
When the loan default continued, KCB renewed its auction plans the end of July, 1992.
The Muigai brothers have always disputed the deal, arguing that they did not give any lawyer instructions to agree to auction of the land in default of loan repayment. In 1997 Justice Githinji had halted KCB’s auction plans on account of the missing court record, but the lender moved to the Court of Appeal, which allowed KCB to proceed with its auction plans.
Though the Muigai brothers deny that there was ever a deal, the High Court and Court of Appeal have in the past maintained that there was one, written out and signed by lawyers on both sides of the fence. In dismissing the Muigais’ case in 2016, the Supreme Court declined to reopen that debate.
“In asking this court to pronounce itself on the propriety of a missing record of the High Court, we are being called upon in the very first place to determine the question of the legality of the consent made by the parties in that missing record. That question was settled as far back as 1998. It is not conceivable that this Court should reopen that consent,” the Supreme Court bench said in its judgment.
Three years later, the Muigais tried to revive one of the cases that flopped at the High Court. They sought the Court of Appeal’s permission to revive the suit on grounds that there was new evidence to show that the consent filed in the missing 1992 case was a work of forgery. The Court of Appeal dismissed that application.
In 2017, as Bidii Kenya was putting pressure on police to effect Justice Havelock’s eviction order, the Muigais took the land battle to the National Assembly. Through a petition, Ngengi asked Members of Parliament to find that KCB was wrong to auction a guarantor’s property before exhausting collateral provided by the principal borrower.
Despite drawing sympathy from the National Assembly, its Finance Committee held that no law had been broken. Kenya’s laws do not provide the hierarchy when lenders have multiple collateral from both principal borrowers and guarantors. Lenders can choose which property to sell first or last.
The Muigais had also accused KCB of auctioning property without the registered owner’s consent. They insisted that the two pieces of land presented by Benjoh Amalgamated were sufficient to cover the loan balance if auctioned, hence KCB acted maliciously.
“On the prayer that the National Assembly establishes why KCB sold Muiri Coffee Estates without the consent of the owner and before realising the securities offered by Benjoh Amalgamated, the Committee did investigate the matter and found that due process was followed in the sale,” the Finance Committee ruled.
Two years after the National Assembly’s ruling, then Juja MP Francis Waititu sponsored a Bill seeking to compel lenders to first exhaust recovery processes with borrowers before descending on guarantors. Waititu’s Bill was inspired by the Muigais’ petition.
The National Assembly passed the Bill, but former President Uhuru Kenyatta declined to sign it into law. Instead, he sent it back to the National Assembly for consideration alongside a memorandum detailing his reservations with the proposed law change.
The President was particularly concerned that some of the proposed changes would cause debt recovery to take more time and money, which he argued could negatively impact the banking sector.
Ruiru MP Simon King’ara last month proposed a new Bill, similar to Waititu’s.
Shortly after the National Assembly’s ruling in 2017, Benjoh Amalgamated and Muiri Coffee Estates filed a complaint with the Directorate of Criminal Investigations (DCI), claiming that KCB had auctioned property on the strength of a forged consent.
In the course of the DCI investigation, lawyer Gideon Kaumbuthu Menye, whose signature appeared in the disputed consent document as a representative of the Muigai firms, has now claimed that he did not sign the document. Menye asked the DCI to investigate KCB for allegedly forging his signature on the consent document that opened the door for auction.
The Office of the Directorate of Public Prosecutions (ODPP) has since shown signs of prosecuting bank officials on account of Menye’s complaint, even seeking confirmation from KCB on whether it intends to resolve the land dispute amicably. Past attempts by police to investigate complaints against the lender were stopped by the courts in 2011. Muiri lawyer Kithinji Marete in January 2023 wrote to the ODPP, pushing for prosecution on the basis that KCB was not keen on resolving the dispute.
“KCB has no intention of resolving the matter at hand and is happy to string our client along at its convenience, thereby making a mockery of the criminal justice system. Our instructions are that in reviewing the matter, you did concur with Muiri’s long-standing assertion that there is overwhelming evidence to demonstrate on the part of KCB and Bidii Kenya Limited (Bidii) in the commission of offences including conspiracy to defraud contrary to Section 317 of the Penal Code,” Marete wrote.
Muiri has been asking the bank to return its title deed then reimburse Bidii the Sh70million it paid for the property through a public auction. BY DAILY NATION
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