How Moi firm sold Uchumi fake Sh2.3bn property

The late former President Daniel Moi and his associates fraudulently acquired two titles to a Sh2.3 billion land in Nairobi’s Roysambu area which they used to sell the property to Uchumi Supermarkets #ticker:UCHUM and take a loan from Barclays Bank of Kenya, the predecessor to Absa Bank Kenya #ticker:ABSA.

A report by the National Assembly’s Departmental Committee on Lands reveals that the retail chain, banks, churches and the Kenya Defence Forces are among a group of victims that are staring at major losses from multiple fraudulent dealings on the a 17-acre land.

It emerged that Solio Construction Company Limited, which was partly owned by Mr Moi, was given the land for free in 1999 in an irregular transfer signed by land officials while the property remained under Mayer Jacob Samuels, an Israeli who died in 1974.

Uchumi, through its investment vehicle Kasarani Mall, said it paid Solio Sh85 million in 2001 for the land, which the Kenya Defence Forces has now taken over.

The committee established that the rightful owner of the land was Mr Samuels, adding that the Moi firm was seemingly allocated the land for free before expiry of the Israeli’s lease.

Mr Samuels owned the land on a 99-year lease that expired on November 1, 2003, but the former President and his cronies acquired it earlier and flipped it to Uchumi in 2001.

“The purported transfer of lease to Solio Construction Limited was done when there was already a subsisting lease of 99 years which was to expire in 2003 and the transfer was effected in 2001, two years before the expiry of the lease,” the report says.

“The Chief Land Registrar, Ms Sarah Mwenda, denied signing the transfer form transferring the parcel of land LR 5875/2 from Solio Construction Company Limited to Kasarani Mall Limited in 2001, although a stamp bearing her unique number (14) was used in the said form.”

The committee also discovered that Solio had acquired a separate title to the same property acquired on May 18, 1992 and which was used to take a loan of undisclosed amount from Barclays Bank of Kenya.

This technically means that Uchumi was sold a fake property. Uchumi, which has been struggling to pay suppliers and service its debts, had announced its intention to sell the land so as to inject much needed liquidity on its balance sheet.

After “buying” the land from Solio, Uchumi later moved to sell it to Jewel Complex Limited which paid a deposit of Sh330 million that was financed by KCB.

Jewel had committed to conclude the transaction on the condition that the land (LR. 5875/2) is merged with a nearby plot (LR. 23393) which it also intended to acquire from Grace Independent Baptist Mission Trustees using a loan of undisclosed amount from Equity Bank.

But the committee established that the lease for LR. 23393 had expired, meaning that the parties were transacting on land belonging to the State.

“The subsequent attempt to amalgamate the two pieces of land was being done albeit the existence of a caveat on the land dating back to 2004,” the report says.

Uchumi’s chief executive Mohamed Mohamed told the committee that it is seeking to have the ownership tussle with the Kenya Army for the prime property resolved by the Head of Public Service, Joseph Kinyua.

Kenya Army forcibly took over the property despite the Ministry of Defence lacking title for the prime property.

KDF last year moved to occupy the land even though the Ministry of Defence does not have a title to the property.

The parliamentary report shows how Mr Samuels failed to sell the land to the government and how a series of interlopers subsequently joined the fray.

The Ministry of Defence in 1985 offered to buy the land (registered as LR.5875/2) from Mr Samuels for Sh3.5 million.

The Israeli national rejected the amount and went to court, winning an enhancement of the award to Sh23 million the following year.

He did not receive any compensation, retaining the ownership until the expiry of the lease in 2003. “The committee noted that the provisions of Section 8 of the Land Acquisition Act Cap. 295 (now repealed), required that where land is compulsorily acquired, full compensation was to be paid promptly. This was never done,” the report says.

“Additionally, despite the fact that the Ministry of Defence submitted a receipt showing that Sh3.5 million was paid to the Commissioner of Land, there was no evidence submitted to indicate that the money was deposited to Middle East Bank and released to Mr Jacobs.”

There was no surrender or cancellation of the original certificate of lease held by Mr Samuels and City Hall records still identify him as the owner of the land on which he owes property rates.

The committee recommended that the Ministry of Lands and Physical Planning secure the title relating to LR. 23393 to ensure that Kenyans are not conned by people purporting to own the property.

“There was collusion between officials of the Ministry of Lands and Physical Planning as evidenced by (Solio and Grace land holdings) in order to effect fraudulent transactions on LR 5875/2 leading to loss of public funds,” the report said.

“The Nairobi County Government had already issued allotment letters to (the members of the community) regularising individual ownership upon payment of Sh69,500 of which some of the members had already paid,” adds the report.