Kenyatta University’s low-cadre staff, who are servicing loans for land, are gridlocked by directors’ tussle over Sh1 billion profits looted from them. In the meantime, Equity Bank continues to enjoy steady interest fees
Three years after Kenya’s independence in 1963, its iconic leader, Mzee Jomo Kenyatta, invoked the powers of his office to award himself a “small” farm in Juja, on the fringes of his Gatundu homeland, an hour north of Nairobi.
The “small” farm was 509 acres. In this spirit of fairness, the grand old man also gave his son, Peter Magana Kenyatta, 200 acres next to his land. Now the two could be neighbours.
At the time, the president was telling millions of landless squatters that the new Government did not have free land to give out. Majority of the squatters had been disinherited and displaced by the colonial government as punishment for supporting the Mau mau.
Leading by example, Kenyatta paid for the two parcels of land he had obtained for himself and his son. The amount he paid was a princely sum of Sh5,472. That’s for some 709 acres! Essentially, he was buying each acre for Sh7.70. At least it wasn’t free.
On July 9, 1966, while executing the powers vested in his office, Kenyatta officially transferred the land to himself. The title deed reads in part: ”The President of the Republic of Kenya on behalf of the Government of the Republic of Kenya grant unto His Excellency Mzee Jomo Kenyatta, President of Kenya (Post Office Box 125 Ruiru) the piece of land situated in Nairobi, containing 509 acres Land Reference Number 11493…”
The only condition the “Government” gave to Kenyatta was that the land be used for agricultural purposes only.
Kenyatta would repeat the script on November 14, 1966, and sign off some 200 acres to his beloved son Magana. Documents relating to Magana’s land indicate that the title was freehold. He shared the postal address with his father.
After lying fallow for 45 years – which means the land acquisition was actuated by greed, not need – the two pieces of land were discreetly sold by the Kenyatta family for about Sh1.4 billion. One piece was sold through a front company, Edge Worth Properties Limited, on August 23, 2010, to Eastern By-Pass Estate Company Limited, with each acre fetching Sh2 million.
Eastern By-Pass Estate Company Limited, which was registered on May 17, 2010, had been formed by senior lecturers at Kenyatta University. The lecturers hoped to buy land and later sell it to their 1,017 middle- and lower-cadre employees for profit.
The company was spearheaded by Dr Muthumbi Waweru, who was then Dean of School of Engineering and acted as the Chairman of the Board of Directors. Other directors included Prof Muasya, Gitahi J I, Aaron Tanui, N Karagu, Ruth Ndung’u and C Ombuki. The directors were all working at Kenyatta University at the time.
A Memorandum of Understanding between Kenyatta University, Equity Bank and Eastern By-Pass Estate Company Limited indicated that interested staff would be granted secured individual loans (with the group title as collateral) to purchase the plot. The money would be recovered through the check-off system.
The plan by the company was simple. The directors bought and subdivided the 509-acre parcel into three blocks. Some 100 acres, which had earlier been used for quarrying, was designated as a low-prime area suitable for apartments. The company intended to sell an acre for Sh3 million and realise Sh300 million.
Another 50 acres was designated as prime area. Here, a commercial centre would be situated in each plot, measuring 0.028ha. This translated to Sh10 million per acre. In this area, the company would realise a total of Sh500 million.
The third block was meant for residential, single-dwelling houses. This was a total of 1,775 quarter-acre plots, sold at Sh388,000 each, and netting Sh688,700,000. In total, the company expected to realise Sh1.4 billion.
The proceeds, according to the directors’ projections, were enough to cater for the initial cost of buying the 509 acres from the Kenyatta family, and leave them with a “small” profit of about Sh300 million.
To maximise on their profits, the directors used the estimated Sh700 million paid by about 900 plot buyers to secure the second plot (Magana’s parcel) measuring 200 acres. Out of this, some 117 acres was to be sold as residential quarter-acre plots.
The initial price per plot was fixed at Sh900,000. This was later adjusted to Sh1.1 million. The company aimed at generating a whopping Sh1 billion after selling 1,060 plots. This was considered profit, to be shared among the directors.
Investigations reveal that although Eastern By-Pass Estate Company Limited was originally meant for Kenyatta University staff, its membership was expanded to include employees of Equity Bank and other interested buyers not affiliated with the two institutions.
Although the buyers were given allotment letters and share certificates as proof of having purchased land from Eastern By-Pass Estate Company, they later realised that it was unclear which parcel of land they had invested in.
When money began trickling in, things went wrong at the Eastern By-Pass Estate Company Limited, occasioned by major fallout among directors over the sharing of the Sh1 billion spoils expected at the conclusion of the deal.
Trouble started after the chairman, Muthumbi Waweru, claimed that some of his colleagues had secretly manipulated the company file at the Registrar of Companies, tampering with the shareholding. He had been issued 334 shares while Joseph Irumbi Gitahi had 333 shares. The remaining 333 shares had not been allocated.
In the original script, the shareholding formula was as follows: The chairman of board was supposed to get 40 percent, while the other two directors, one of whom was standing in for a senior university official, would get a 30 percent shareholding each.
In effect, each of the major shareholders would get about Sh400 million. The other two would rake in Sh300 million from the Sh1 billion profit realised from the two Kenyatta parcels of land.
In an affidavit filed in court on August 15, 2011, Muthumbi averred that he had received calls from Olive Mwihaki Mugenda, the Vice Chancellor of Kenyatta University, demanding that she be allocated 40 shareholding of the company.
In his application against the Registrar of Companies, Eastern By-Pass Estate Limited, Equity Bank, Olive Mugenda and Joseph Irumbi, Muthumbi sought judicial review to have alterations made in the company shareholding to be quashed.
He claimed that after he refused to comply, Mugenda vowed to kill the company by getting Equity Bank to recall its loan. Later, Muthumbi alleged his lawyer discovered that non-company members had tried to change the shareholding of the directors.
The application opened a floodgate of suits, which saw the 809 buyers also join the fray, apprehensive that squabbling among the directors would lead to loss of their investments.
What started as an investment scheme has turned into a convoluted scam where some senior university lecturers linked to the company have been sacked by Kenyatta University, as junior varsity and Equity Bank employees wait with baited breath, fearful that they might lose their lifetime savings.
The only benefactor in the whole saga is Equity Bank, which continues to receive monthly payments from plot owners it had granted loans as it also holds onto the ownership documents of the land the workers were meant to buy.
In the meantime, relatives of Mzee Jomo Kenyatta, who sold the pieces of land at the centre of the controversy for nearly Sh1.5 billion, continue to enjoy the fruits reaped from the scheme.
Article By Mavulture.com