The auction of a Sh3 billion estate belonging to President Uhuru Kenyatta’s relatives was based on fraudulent bank statements of account, the Court of Appeal has heard.
Appeal judges Roselyn Nambuye, Milton Makhandia and Kathurima M’Inoti were Monday told that KCB Bank did not furnish Muiri Coffee Estate Ltd with a statement of accounts before it auctioned the estate ten years ago.
The judges heard KCB proceeded to sell the land before producing a full statement of account to Benjoh Amalgamated Ltd which it had advanced a loan in 1989.
Benjoh, owned by Captain (Rtd) Kung’u Muigai had offered two securities in Nyandarua County as a guarantee for the land and Muiri Coffee Estate Ltd associated with former assistant Minister Ngengi Muigai which had also pledged the farm as security.
While asking the court to dismiss an appeal challenging a superior court’s decision that Benjoh was entitled to a full statement of accounts, lawyers Kyalo Mbobu and Kinthinji Marete said the sale of the 443-acre Muiri Coffee Estate in Kiambu County was irregular.
“The late Justice Joyce Khaminwa properly ruled that the borrower was entitled to a statement of its accounts, to date KCB has never [provided] a statement of accounts as required under the law to Benjoh,” Mr Mbobu told the court.
He said under the law a bank is duty-bound to inform its customer the status of the account by providing the statement of accounts regularly.
He told the judges by the time KCB descended on Muiri Coffee Estate and sold the land to Bidii Kenya Ltd, Benjoh had not been informed about its loan status by the bank.
AMOUNT NOT KNOWN
The judges heard that even the bank itself did not know the amount it was demanding from Benjoh as confirmed by its manager, Mr Chris Theuri, when he testified before in 2009.
“A senior bank official, Mr Theuri, told the late Justice Joyce Khaminwa (that) he did not know the amount the bank was demanding from Benjoh,” Mr Mbobu said.
He said the judge was left with one option but to find that the bank manufactured a statement of account in respect of the amount it was demanding from Benjoh.
Mr Mbobu also refuted a consent entered between the bank and Benjoh on March 4, 1992 on which securities would be sold.
He said the Court of Appeal had pointed that the securities which would be sold in case of default were two properties in Nyandarua and not Muiri Coffee Estate.
Muiri says it has paid the bank the money it pledged as security and that its 443 acres should not be sold at all.
The judges were asked to dismiss an appeal by KCB seeking to quash the judgement of Justice Khaminwa that the company was entitled to a statement of accounts.
Benjoh had been advanced the loan to invest in a flower project in Nyandarua.
It alleges the bank flouted the loan terms and, as a result, the project collapsed.
But lawyer Philip Nyachoti urged the judges to allow KCB’s appeal and find that the Justice Khaminwa erred in her finding that the bank did not keep a proper record of its customer’s account.
Mr Nyachoti for KCB and lawyer Issa Mansur for Bidii Kenya said the bank was entitled to sell the pledged securities to recover its money.
Mr Nyachoti said the issue of accounts had been determined by both the Court of Appeal and the Supreme Court and that “it can’t be re-opened”.
Mr Mansur said the case has been pending in court for over 22 years and that the litigation must come to an end.
Benjoh says the Sh3 billion coffee estate was sold by KCB in September 2007 to Bidii Kenya Ltd for only Sh70 million.
KCB says it was given the power to exercise its statutory duty over the property through a consent that was entered between the parties in 1992 and which has been vehemently contested by Benjoh and Muiri.
The court will deliver a judgement on November 17, 2017.
Finance Committee rules that law was followed in the auction of the disputed property.