Court keeps auctioneers in Tuju debt row at bay

High Court on Friday blocked East African Development Bank (EADB) from selling a Karen property owned by Jubilee Party Secretary-General Raphael Tuju over a botched Sh1.53 billion ($15.6m) loan deal.

Justice Grace Nzioka also directed that no assets belonging to Dari Limited, should be disposed of, pending the hearing of the dispute next month.

She added that no decision should be taken on the multibillion-shilling property that could derail the outcome of the suit.

The loans were targeted for the construction of Sh100 million two-storey, flat-roofed bungalows sitting on a 20-acre forested land dubbed Entim Sidai and purchase of a 94-year-old bungalow built by a Scottish missionary, Dr Albert Patterson, which currently operates as a high-end restaurant.

But development of the 12 luxury homes worth Sh1.2 billion has fallen behind schedule, setting the stage for defaults and asset seizures.

Mr Tuju, through his lawyer Paul Nyamodi, blamed the bank for the delayed construction of the homes after the lender declined to provide additional millions for building the luxury houses in breach of the loan agreement.

EADB had on December 23 appointed receiver managers —George Weru and Muniu Thoithi— for the Tuju property under Dari Limited to prepare for the sale of its assets to recover the Sh1.53 billion debt.

This prompted the courts on December 24 to block the receiver managers from taking over Dari Limited, and Justice Nzioka reckons she will hear the dispute on the receivership on January 22.

Mr Nyamodi on Friday petitioned the court to extend the orders, barring the two receiver managers, from moving into the property, pending the determination of the case. The order issued December 24 lapsed on Friday.

Justice Nzioka directed the parties to file and exchange documents they wish to rely upon in the case, ahead of the hearing on February 13.

She further directed the parties to appear before her on January 22 to argue the application on whether the receiver managers should be barred from moving in to the property.

Mr Tuju accused EADB of disbursing Sh932.7million instead of the agreed Sh943.9 million, adding that the bank had reneged on the plan to offer Sh294 million for building the luxury homes for sale.

“EADB is fully aware that in the absence of the development of the housing units for sale as envisaged in the project proposal, Dari would not be able to service the loan facility,” he added.

He also accuses EADB of stopping KCB Group #ticker:KCB from taking over the loan and derailing equity investments in the deal by Dubai investors.

“The defendant is frustrating the plaintiff’s efforts to secure alternative funding thereby clogging the plaintiffs right to redeem the facility,” he added.