Kanyotu widows back in court in fight for control of Sh15bn estate

A protracted five-year succession dispute over the multi-billion-shilling empire built by former spymaster James Kanyotu resumes on Wednesday in the High Court in Nairobi.

The hearing was adjourned two months ago to allow the beneficiaries to settle the dispute amicably.

Justice Luka Kimaru gave the parties 60 days from last November 15 to agree on how to distribute 61 properties across the country and shares in 22 companies.

But there was a rider in his ruling. “In the event of any disagreement to reach a settlement, the parties will file further affidavits indicating their preferred mode of distribution for the court to decide,” he said.

Mr Kanyotu, Kenya’s longest- serving intelligence chief for 27 years, had until his retirement built an empire with extensive interests in hotels, banking, mining, insurance, real estate, aviation and large-scale farming.

A shadowy, private man who shunned publicity until he was unmasked at the inquiry into the country’s worst financial rip-off — the Goldenberg scandal — he had partnered with scandal architect Kamlesh Pattni in at least two companies, Exchange Bank and Goldenberg International, and was easily one of Kenya’s wealthiest men.

At the centre of the succession dispute is the inheritance of his properties which include three investments companies — Half Moon, Full Moon and Cloud Limited.

There are also shares in Barclays Bank, Sameer Group, Kenindia Assurance, Kentmere (1986) Ltd, Middle East Bank, Kenya Tea Development Agency, Kenya Melamine Manufacturers, Collindale Security and Collindale Limited.

The investment inventory also lists Mr Kanyotu as a shareholder of Kangaita Coffee Estate, Acacia Court, Acacia Renovators, Pine Court, Sonara Kwakanja Ltd, Shylocks Ltd and Metropolitan Health.

He owned land and buildings in Nairobi, Mombasa, Kiambu, Gilgil, South Nyanza, Kirinyaga and Nyandarua. In Kirinyaga, his ancestral home, he is listed as having acquired 37 parcels of prime land.

Conservative estimates value his investments at Sh15 billion, but the exact figure could be higher given the appreciation of the land and shares in the Nairobi Securities Exchange.

Succession case number 1239 of 2008 was lodged by Mr Kanyotu’s second wife, Jane Gathoni, against her co-wife Mary Wanjiku and her three sons and a daughter, Mr Christopher Ngata, Mr Andrew Peter Ngirici, Mr John Kariuki and Ms Sandra Njau.

On June 23, 2010, an approval was obtained in court by the beneficiaries where Jane Gathoni Kanyotu, Margaret Nyakinyua Murigu and Mary Wanjiku were appointed interim joint administrators of the estate.

Mr Kanyotu’s two most lucrative properties — Kawakanja Ltd and Kangaita Coffee Estate — are listed in the suit as interested parties.

Thika businessman Dick Githaiga, who is laying claim to a parcel of land allegedly sold to him by Mr Kanyotu, is also named as party to the succession suit.

Mr Githaiga, the managing director of Dimken Ltd, the company that built the Deputy President’s residence half-way before the contract was cancelled, claims Mr Kanyotu sold him parcel LR 32/965 in Ngumo Estate and wants the court not to consider it as part of the estate in the dispute.

The petitioner, Jane, is accusing her co-wife, Mary, and children of irregularly manipulating the shareholding of various companies in which Mr Kanyotu had a stake to tilt the eventual entitlement to the estate.

She sought an injunction restraining Mary and her children from any involvement in the properties and shares held in the name of their late husband until the succession dispute was heard and determined.

She in particular sought orders stopping Mary from adversely dealing with Kawakanja Ltd and Kangaita Coffee Estate.

Kawakanja Ltd owns the palatial home of the former spy chief in Tigoni, Kiambu, and which currently houses the exclusive resort, Sovereign Suites.

ENTERED INTO AGREEMENT

Apart from the succession dispute, Jane lodged a separate application seeking to stop the sale of the palatial home after it emerged that Kawakanja had entered into an agreement to dispose of the property to Westlands Residential Resort Ltd for Sh775 million.

Jane objected to the sale, arguing that the High Court had issued orders stopping any dealings in the entire estate including the opulent home. Furthermore, she told the court that the estate administrators had not been consulted to approve the sale.

“She (Mary) had attempted to sell the palatial home, but the sale was stopped by the court,” Jane said in a submission urging the court to again block the sale and order that the status quo be maintained until the dispute is determined.

On November 15, Justice Kimaru concurred with Jane that her co-wife and children had acted unlawfully by purporting to convene a meeting where the share capital of Kawakanja and Kangaita was increased without consent of the administrators.

Mary had convened a meeting of the company where the share capital of Kangaita was increased from 5,000 to 100,000 shares.

Prior to the increase, the deceased owned 4,995 shares. The five other shares were held by the children of Mary Kanyotu and Kawakanja Ltd.

After the increase of the share capital, Mr Kanyotu continued to hold 4,995 shares while Mary Kanyotu and her children held 95,000 shares.

In Kawakanja Ltd, Kanyotu owned 999 shares while Tropical Registrars Ltd owned 1 share. Mary, at a meeting of the company convened on March 21, 2009, increased the share capital of the company from 1,000 shares to 10,000 shares. The increased shares were allocated to her and her children.

Consequently, the judge issued orders blocking Mary and her children from dealing with any of the Kanyotu property without the consent of the administrators.

He ruled that the shareholding of all the companies where Mr Kanyotu was the majority shareholder should remain intact as at February 13, 2008, when he died.

The judge subsequently cancelled all the changes made in the shareholding of the companies but directed that Mary be refunded the money she had allegedly paid to settle the debts of the estate, if she proves that she effected payment.

Mary argued that she had convened the meetings to increase the share capital of Kawakanja and Kangaita to settle a debt of Sh38 million Mr Kanyotu owed to Pan African Credit and Finance following a court order.

She also claimed to have paid the Kenya Revenue Authority (KRA) Sh16 million which the taxman had demanded from Kangaita Coffee Estate.

“It had been resolved in the meetings I convened that the only way to settle the estate debts was by recapitalising the two companies. This was done by increasing the share capital in Kawakanja and Kangaita,” she submitted.

Jane’s son, Willy Kanyotu — an interested party in the suit — dismissed his stepmother’s submissions, saying she had not tabled evidence to support the contention that his father owed Pan Africa Credit and Finance. He argued that there was no document indicating that any payment was made to the lender.

He told Justice Kimaru that the alleged payment to the financial institution was a ruse used by his stepmother to deprive the estate of the value of shares held by his father.

But Mary explained to the court that she took the action to protect the estate.

The judge disagreed with her contention, saying any decision touching on the properties could only have been made by the administrators and not some of the beneficiaries “hiding behind the veil of incorporation of the two companies”.

“It was not her (Mary’s) business to be especially concerned with the liabilities of the estate. She had no special interest greater than that of other beneficiaries and lacked legal capacity to deal with the shares without the consent of the administrators,” ruled Justice Kimaru.

Another interested party to the suit, Mr George Mwaura, termed the decision to increase the share capital of the two companies irregular, saying the exercise was conducted to reduce and diminish the value of the shares held by Mr Kanyotu.

HELD IN SECRET

Mr Mwaura said that the meeting convened to increase the share capital was held in secret and the beneficiaries were not notified.

In 2009, the court issued orders barring the family from interfering with the properties, but Mary prevailed upon the court to lift the caveat on grounds that it had blocked the disposal of other assets where Mr Kanyotu was not a shareholder.

The properties she claimed were not part of the estate include Collindale Security, Kawakanja, Kangaita, Acacia Court, Full Moon Investments Pine Court, Sameer Investments and Sonara.

Other interested parties include Kawakanja Ltd and Kangaita Coffee Estate Ltd, both represented in court by lawyer Odhiambo Adala. Others are Francis Iganjo Mutahi, Willy Kihara and Dick Maina.

Kanyotu died at 71 on February 13, 2008 after steering the Directorate of State Intelligence, then known as Special Branch, for 27 years.
He became intelligence chief in January 1965 aged 28. He retired in 1992.

An alumnus of Alliance High School, Mr Kanyotu served for 13 years during the Moi reign until his retirement.