Jirongo land auction over Sh495m loan default fails

The auction of businessman and presidential candidate Cyrus Jirongo’s land in Kitale to recover a defaulted loan in the collapsed Dubai Bank fell through yesterday after bidders failed to match the reserve price.

Valley Auctioneers, contracted by the Kenya Deposit Insurance Company (KDIC), failed to get a buyer who could match the Sh70 million reserve price for the 102.7 acres located 18 kilometres (km) from Kitale town, Trans Nzoia County.

The set reserve price values an acre on the vacant farm at about Sh682,000.

The property, on the Kitale-Kapenguria road 5.5km from Maili Saba trading centre, is being sold to partly recover a Sh495 million loan that Mr Jirongo’s firm owes the bank which is under liquidation.

The highest bid, according to a source at the auction where journalists were locked out, was Sh42 million.

READ: Atwoli takes Sh110m debt row with Jirongo to court

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The land is owned by Mr Jirongo’s Kuza Farms and Allied Limited, which was among six companies placed under receivership by the Central Bank of Kenya (CBK) last year, for having defaulted on their loans when Dubai Bank was put under statutory management on August 14, 2015.

This followed a report by external auditor Horwath Erustus and Company to the Finance, Planning and Trade Committee of the National Assembly in May 2016, which revealed that the lender had non-performing loans amounting to Sh2.5 billion from December 2014.

Other defaulters include Zap Group (Sh889 million), Kwanza Estates (Sh412 million), Sololo Outlets, which is also associated with Mr Jirongo (Sh103.2 million) and Torino Enterprises Limited (Sh138.9 million), according to the audit report.

The CBK through liquidator, the KDIC, started auctioning the bank’s assets in August last year.

Mr Jirongo, the presidential candidate on United Democratic Party ticket in the August 8 polls, moved to court in November last year challenging the legality of the receivership status at Kuza Farms and Allied Ltd.

Fraudulent withdrawals

In court documents, he has argued that the firm borrowed a Sh100 million debenture from Dubai Bank in in 2009, and that it was fully paid.

“Kuza Farms & Allied has previously complained to Dubai Bank concerning fraudulent withdrawals on its account. The sum of Sh495, 289,931 demanded by the defendant is astronomical and not based on any contract,” the court document read.

“To the plaintiff’s shock, Dubai Bank has now purported to appoint Peter Kahi and Anthony Muthusi as receivers over Kuza Farms.”

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