Senator Mohamed Said Chute, owner of Blue Nile (East Africa Ltd) and Deputy Chief Justice Philomena Mwilu.
Blue Nile (East Africa Ltd), a company owned by Marsabit senator Mohamed Said Chute and which left a trail of debt over the years, has gone belly up amid a tender fraud investigation by the anti-graft agency.
The company goes down with a legacy of debt, suspected involvement in tender fraud and unwittingly contributing to a failed attempt by former Director of Public Prosecutions Noordin Haji to prosecute Deputy Chief Justice Philomena Mwilu in 2018.
For 10 years, Blue Nile (East Africa) had won protracted hide-and-go-seek with several creditors, even in court, over debts in excess of Sh290 million.
In the end, it is the Sh12.3 million owed to Apex Steel Ltd that has finally felled Blue Nile (East Africa).
Justice Njoki Mwangi, on March 14, ordered the Official Receiver to either liquidate the firm owned by Mr Chute and his wife, Lidia Gode Yussuf, or appoint an individual to undertake the process.
The judge issued the liquidation order after finding that in the four years that the case has been in court, Blue Nile (East Africa) did not make any attempt to pay Apex Steel’s admitted debt or offer a payment plan.
Mr Chute and his wife had used similar arguments in other cases against creditors.
“Despite the said proposal, approximately four years later, the Company has neither alleged nor demonstrated whether its debtors have paid it, and if so, how much has been paid. It has also not provided the proposed structured repayment plan for consideration by the petitioner, its creditors and this Court,” Justice Mwangi ruled.
One month before Apex Steel filed the insolvency petition, Blue Nile (East Africa) had filed a case of its own, seeking to block creditors from attaching assets owned by the company and its directors to recover millions.
Blue Nile (East Africa) filed the suit against Prime Steel Mills, Western Steel Mills, Abyssinia Iron & Steel and Apex Steel.
Also Read: High Court refers Mwilu case to CJ Maraga
Mr Chute and Ms Yussuf, in that case, secured temporary orders barring attachment or committing them to civil jail for debt default after arguing that Blue Nile (East Africa) was owed over Sh551 million by various companies and county governments, against total debts of Sh290 million.
Senator Mohamed Said Chute, owner of Blue Nile (East Africa Ltd).
Justice Enock Chacha Mwita in September 2023 lifted that order after finding that Blue Nile (East Africa) and its directors had neither made an attempt to pay admitted debt or showed plans to do so.
“I agree with the creditors that the application was meant to forestall and frustrate their quest for payment given its timing and the fact that the application was not only filed late but was also not made in good faith when one looks at the nature of the orders sought,” Justice Mwita said in his ruling.
Default and fraud claims
In 2017, Blue Nile (East Africa) sued Antwerp-based Ase Metal N.V. Belgium to stop the recovery of a $505,490 (Sh65 million) debt.
The Belgian firm had supplied Mr Chute’s firm with metals worth $610,490 (Sh78.9 million). Blue Nile (East Africa) only paid $105,000 (Sh13.5 million).
In that case, Mr Chute denied that his firm had any dealings with the Belgian firm. He claimed that it was Blue Nile Wire Products Ltd that had ordered for the products from Ase Metal N.V.
Records from the Business Registration Service indicate that Blue Nile Wire Products is owned by Mr Chute’s wife, Ms Yussuf, alongside the owners of Blue Nile Rolling Mills – Kotni Rao, Botu Rao, Kotni Kumar, Varanasi Kumar and Mandakini Kumar.
Mr Chute claimed that Blue Nile Wire Products Ltd, where his wife is a shareholder, had defrauded the Belgian supplier, and even sought to enjoin the firm in the suit.
The High Court dismissed that argument and entered judgment in favour of the Belgians on account of evidence presented to the effect that Blue Nile (East Africa) had admitted to owing the Sh65 million.
The Court of Appeal upheld Justice Grace Nzioka’s judgment after Blue Nile (East Africa) challenged her decision, which opened the door for Ase Metal N.V. to attach assets.
The liquidation order comes as the Ethics and Anti-Corruption Commission (EACC) probes Blue Nile (East Africa), Mr Chute, his wife Lidia Gode Yussuf and another of their companies – Midroc Water Drilling Company – for alleged tender fraud in Marsabit County.
Marsabit Senator Chute Mohamed Said speaking at parliament buildings Nairobi on Thursday, August 10, 2023.
EACC’s investigation involves alleged conflict of interest on the senator’s part and alleged theft of public funds through the two companies in tenders with a combined value of Sh365 million.
The anti-graft agency has already recorded statements from Mr Chute and several officials of the county government.
EACC’s investigation has entangled Marsabit governor Mohamud Ali.
Blue Nile (East Africa) and Mr Chute were in 2018 implicated in a Directorate of Criminal Investigations (DCI) probe into Deputy Chief Justice Mwilu, who was accused of irregular loan dealings with Imperial Bank.
Philomena Mwilu is the Deputy Chief Justice and vice-president of the Supreme Court of Kenya since October 28, 2016.
The investigation uncovered that Justice Mwilu borrowed Sh100 million for some real estate dealings, including purchasing a developed half-acre land in Lavington from Mr Chute for Sh80 million.
In that initial arrangement, Imperial Bank was to disburse Sh60 million to KCB Bank to offset a loan Mr Chute had borrowed, meaning Ms Mwilu would only send Sh20 million to Mr Chute as the balance of the purchase price.
After acquiring Mr Chute’s property, Justice Mwilu was allegedly to use the same land as security for the loan used to buy it.
Eventually, Imperial Bank disbursed Sh60 million to Justice Mwilu. Of that amount, Mr Chute and Blue Nile (East Africa) each received Sh10 million. Lucy Muthoni Magelo received Sh36 million, while Sh4 million was deposited in the Deputy Chief Justice’s account at Imperial Bank.
Senator Chute Mohamed Said during a session at the Bunge Tower Nairobi on Tuesday, January 28, 2025.
It is unclear if the collapsed bank released the Sh40 million balance of the Sh100 million loan.
Justice Mwilu’s petition to block the DPP from prosecuting her over the DCI investigation was successful, as the High Court found that evidence against the judge had been obtained illegally and which soiled the investigations.
In another petition, the High Court ruled that the DPP and DCI are not among individuals and institutions described as “any person” in Article 168 of the Constitution which provides the procedure of removing a judge from office. That ended the bid to remove Justice Mwilu from office.
In the debt battle with Apex Steel, court documents indicate that Blue Nile (East Africa) purchased metals worth Sh12.3 million between May and July 2016. Payment was to be made within 30 days.
However, three years later, the debt was still pending.
In 2019, Apex Steel held a meeting with Blue Nile (East Africa) in which it was agreed that the debt would be settled soon.
A year later and no payment, Apex Steel issued its estranged client with a statutory notice – a 21-day demand for payment, failure to which insolvency proceedings are initiated in the courts – but the debt was not settled.
Apex Steel filed an insolvency petition against Blue Nile (East Africa) on December 16, 2020, which was more than six months after serving the statutory notice.
In court, Mr Chute’s company did not deny the debt.
