Firm in Sh135m land dispute linked to pyramid schemes

The protracted ownership dispute now risks stalling a multibillion-shilling World Bank-funded sanitary land refill project.

The World Bank has already pumped more than Sh800 million into the project that was meant to solve solid waste management challenges in the counties of Murang’a, Kiambu and Nairobi.

Appearing before the Public Accounts Committee (PAC) on Monday, Asset Recovery Agency (ARA) Director Col Alice Mate said investigations by the Directorate of Criminal Investigations (DCI) had established that Ekeza Sacco Society Limited, Gakuyo Real Estate Limited and Chosen Builders Investments Limited are linked to Mr Ngari.

Ms Hannah Wachu Kariuki is also a co-director with Mr Gakuyo at the two companies.

Col Mate further told the National Assembly committee chaired by Ugunja MP Opiyo Wandayi that Mr Ngari was chairman of the Sacco since its inception and a director of the two companies.

The probe came after 7,800 Ekeza Sacco Society Limited depositors filed complaints to the DCI alleging fraud, theft and misappropriation of their investments to the tune of Sh1.05 billion.

“The depositors claimed to have invested the money with the Sacco on the expectation that they would be advanced loans or given property. They, however, complained that they did not get what they were promised,” Ms Mate told the committee. 

Committee members Joseph Ngugi (Gatanga) and Eve Obara (Kasipul Kabondo) questioned whether the National Land Commission (NLC) was aware that the land was charged to Family Bank.

“What due diligence did NLC undertake before acquiring the land?” Mr Ngugi wondered.

He claimed the ‘acquisition’ was calculated to defraud the government.

Sh135.47 million was paid to the company through an account held at Family Bank in two tranches.

The first payment of Sh53 million was received in April 2017 and the second payment of Sh82.47 million was received on January 15, 2018.

The transaction was, however, flagged by Auditor-General Nancy Gathungu in a special audit on the NLC accounts.

The audit covered the NLC’s compulsory acquisitions on behalf of the other government agencies for the period 2014/15 to 2016/17.

The attention of the Auditor-General was drawn by the fact that despite having the land fully paid for by January 2018, the government was yet to get the title deed.

The watchdog committee, which is considering the special audit, heard that Chosen Builders Investments Limited got a Sh408 million loan facility from Family Bank on April 30, 2015 to buy a 300-acre parcel – LR No. Mitubiri/Wempa Block 1/6824 using the same land as security.

The 50-acre parcel that was fully paid for by the government is part of this land, meaning its subdivision cannot be done until the loan is repaid.

The committee heard that in January 2019, one of the company’s directors put some of his properties for sale by auction, including the 300-acre land.

However, on February 14, 2019, Commissioner of Cooperatives through instructions from the Trade, Industry and Cooperatives Cabinet Secretary obtained a court order stopping the intended sale by auction.

The Commissioner of Cooperatives was at the time investigating Ekeza Sacco directors following complaints by its members.

The move by the Commissioner of Cooperatives was further augmented by the April 15, 2019 restriction of dealings on the land by Ara pending investigations.

The committee also heard that the valuation NLC did on the land before acquiring it was not signed or dated.

Interestingly, the valuation, which claimed the land belonged to the company, has since disappeared without a trace from the commission’s offices at Ardhi House in Nairobi.

Mr Ngari was among the individuals expected to appear before the committee on Monday to shed light on the matter but he did not show up.

The reasons given for his absence were dismissed by Mr Wandayi as flimsy.

Family Bank CEO Rebecca Mbithi had also been summoned but she sent company secretary Eric Murai, who had a difficult time convincing the MPs that the bank was not associated with Mr Ngari’s activities.

This despite the fact that all of Mr Ngari’s businesses have accounts with Family Bank.

The committee issued summons for Mr Ngari and Ms Mbithi to appear before it, as Mr Murai failed to explain why the bank found it so easy to extend a loan facility of that magnitude to a company that did not have a long banking history with the lender.

“How long have you had a relationship with Chosen Builders Investments Limited as a customer and how much was held by the company before it applied for the loan facility?” Mr Wandayi inquired.

Mr Murai said the company first opened an account with the bank in 2015.

This means the company had been a customer for barely a year before it was given a loan.

“The bank had no reason to doubt the credibility of the borrower. We did due diligence,” Mr Murai told the committee.

He did not, however, reveal the amount the company had in its accounts before it applied for the loan.

Ms Obara was not satisfied.

“The owner borrowed to buy land and used the same land as security! How is this possible?” she posed.

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