Blow for Uhuru cousin in prime estate dispute

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By JUSTUS WANGA
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Parliament has given the go-ahead to Kenya Commercial Bank’s (KCB) auction of a 443-acre piece of land in Thika previously owned by President Uhuru Kenyatta’s cousin Ngengi Muigai to real estate firm Bidii Kenya in a 31-year-old battle for the prime property.

The National Assembly Finance Committee while refusing to reverse the auction, held that KCB followed the law in auctioning the land previously owned by Mr Muigai’s Muiri Coffee Estates, and that the courts have already determined the matter in accordance with the Constitution.

The Committee’s report followed a public petition by Mr Muigai contesting KCB’s move to auction the land to recover a Sh11.5 million loan.

Mr Muigai argued that Muiri was a mere guarantor, and that the lender sold its land before attaching properties used by the principal borrower, Benjoh Amalgamated to secure the loan.

He further claimed that KCB did not furnish him with a bank statement before auctioning the land at a throw away price.

The loan was intended to assist Benjoh Amalgamated, also owned by Mr Muigai and his brother Kung’u Muigai, set up a flower farm on the land.

The Committee has however established that KCB was within its rights to pursue guarantors before auctioning the principal borrower’s property.

Despite ruling in KCB’s favour, the Committee has still recommended that the National Assembly amends section 3 of the Law of Contract Act to ensure that creditors pursue principal borrowers before attaching securities placed by loan guarantors.

“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 Committee ruled that while KCB should have auctioned Benjoh’s property first, the lender was not legally obligated to pursue the securities in that particular order.

“All parties involved are at liberty to enter into negotiations with a view of having the matter settled amicably,” the Committee’s Chairperson Benjamin Langat, also the Ainamoi MP says in the report.

Mr Langat added that the Committee cannot reverse the auction as it would interfere with the Judiciary’s independence.

The Committee further noted that the Law of Contract Act is silent on the hierarchy to be followed when recovering defaulted credit from borrowers and guarantors, which drove its decision to recommend amendment of the law.

The Supreme Court last year ruled that KCB was within its rights to sell the land to recover the loan after dismissing a suit filed by Mr Muigai’s Muiri challenging the move.

At the centre of the Supreme Court case was Mr Muigai’s claim that judges who had presided over the matter delivered rulings despite the fact that some documents crucial to the case went missing in 1992.

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