Investors fight for spoils after collapse of Africa’s tallest building

A series of legal battles and exit of financiers have now left White Lotus Projects in disarray and a mountain of debt, with German firm, Peri Formwork Scaffolding, hot on the building developer’s heels over a Sh197 million debt.

Sh187 million debt

Last week, High Court judge Alfred Mabeya allowed the German firm to pursue a Sh187 million debt for supplied formwork — temporary moulds in which concrete is poured during construction — that was not paid for.

Curiously, White Lotus Projects did not make any appearance in the case filed by Peri Formwork, and the court issued a summary judgment based on the German complainant’s statement and evidence.

Peri Formwork told Justice Mabeya that in 2018, White Lotus acknowledged receipt of the equipment and invoices.

White Lotus faced difficulty in paying Peri Formwork, and it eventually paid only USD700,000 (Sh77.1 million) out of the Sh264 million owed.

Peri Formwork obtained a court order directing White Lotus to transfer the equipment to a storage facility in Nairobi. The German firm would sell some of the equipment to third parties, and it recovered USD317,465 (Sh34.9 million).

But the German firm incurred additional costs of USD121,291 (Sh13.3 million) in storage costs.

Justice Mabeya has now allowed Peri Formwork to recover Sh187 million for the equipment and an additional Sh10 million as damages.

Free to engage auctioneers

If White Lotus is unable to pay up, the German firm will be free to engage auctioneers.

“Since the Peri Formwork’s evidence was unchallenged, I hold that the Peri Formwork was able to proof, on a balance of probability, the existence of the said contract, its performance and the breach thereof. Accordingly, the court finds that Peri Formwork has proved its case. Peri Formwork is awarded the sum of USD1,705,158.22 claimed and Sh10,000,000 general damages,” Justice Mabeya held.

White Lotus partnered with the Hass Petroleum Group’s, Jabavu Village, for the Pinnacle Tower project.

They contracted one the world’s largest construction companies in the world, China State Construction Engineering Corporation (CSCEC), on March 9, 2017 for the project.

The entire project was to cost Sh20 billion.

Three weeks after bringing CSEC on board, White Lotus inked a deal with Peri Formwork Scaffolding to supply equipment that would ensure the Pinnacle Tower stood 300 metres in the sky.

White Lotus had already secured a deal with US-based Hilton Worldwide (formerly Hilton Hotels) to run a five-star establishment within Pinnacle Tower.

The German company supplied formwork worth USD2.4 million (Sh264 million), and sent invoices to White Lotus.

Started crumbling

But by then, the Pinnacle project had already started crumbling, largely over the burden of financiers backing out and a court case over a piece of land that White Lotus planned to use for storage of construction equipment.

A legal battle over the use of the land dragged construction as court orders temporarily stopped any use of the land.

And when the courts in 2018 found that construction had proceeded, Justice Samson Okong’o ruled that White Lotus and its officials — Mahat Mohamud Noor and Raju Poosapati — were in contempt of court.

The sentencing for contempt of court was to happen in 2019. When Mr Poosapati failed to show up, a warrant of arrest was issued against him.

Four-way battle

Before White Lotus came into the fray, the land being used for storage of construction equipment was already at the heart of a four-way battle.

The Kenya Railways Staff Retirement Benefits Scheme has been fighting Ugandan tycoon James Mugoya’s Kingorani Investments, a trust started by former United Arab Emirates leader Sheikh Zayed Bin Sultan and a company identified as Pelican Engineering, in court papers.

A White Lotus official last year told the Nation that the company had moved to a different land parcel and was in the process of signing a deal with a financier.

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