Former Cabinet Secretary Raphael Tuju has suffered a blow after the Supreme Court cleared the way for a regional lender to auction his prime properties in Karen, over a debt of Sh4.5 billion arising from a botched loan deal.
A bench of five judges of the apex court disqualified themselves from the case and reinstated a decision of the Court of Appeal issued in April last year, dismissing Mr Tuju’s appeal challenging the enforcement decision in favour of East African Development Bank (EADB).
Deputy Chief Justice Philomena Mwilu and Justices Mohammed Ibrahim, Smokin Wanjala, Njoki Ndung’u and William Ouko recused themselves from hearing stating that they had been accused of bias and working towards an undisclosed predetermined outcome.
“Consequently, and inevitably, each of us on this Bench does hereby recuse him/herself from further participation in the hearing and determination of the appeal dated 25th April 2023 and filed on 26th April 2023,” the court said.
The judges said they “were strongly persuaded that our further participation” in the case would not serve the ends of justice, at least in the eyes and perception of Mr Tuju.
The decision comes a few days after Garam Investments Auctioneers put up for auction one of Tuju's hotels in Karen.
The auctioneer put the notice for sale in a newspaper advertisement on Monday, inviting bids for exotic Entim Sidai Wellness Sanctuary in Karen.
This was after Tuju's attempt to stop the sale, arguing that he has never been served with a statutory notice under section 90 of the Land Act, was dismissed by High Court judge Njoki Mwangi.
Mr Tuju had also challenged the notice for sale arguing that the bank was seeking to recover $35,051,622 (about Sh4.5 billion), an amount that has exceeded the principal amount, on account of interest.
The former Jubilee Party secretary general moved to the apex court last year to stop the sale and also challenge the UK judgment, which was adopted by the High Court in February 2020.
And after being allowed to challenge the court of appeal decision, Mr Tuju made an application to adduce new evidence obtained from a bank official, which allegedly supported his case in the disputed loan.
Mr Tuju also sought to counter additional evidence given by the bank, after the lender was granted the chance by the same court.
He said if not responded to, the bank's false and inaccurate claims would remain uncontroverted and unchallenged.
The application was, however, rejected and Mr Tuju then applied for the judges to halt the proceedings saying he has filed a complaint at the Judicial Service Commission (JSC) over the manner in which they had handled the case.
In the application, Mr Tuju and Dari Ltd accused the court of handling the applications in a manner that led them to believe that the judges were working towards a predetermined outcome.
The former CS submitted that the judges had ignored important and pertinent matters and procedures that are directly relevant and integral to the main issues in the appeal.
And despite his complaints, the court has allegedly ignored or refused to take any action in remedy the same.
The bank opposed the application arguing that it had failed to meet the principles required for grant of stay of proceedings.
In the dispute, his firms Dari Ltd and SAM Company Ltd entered into a facility agreement with the lender for a loan of $9.3 million in 2015 to expand his business.
The loan was secured by several forms of collaterals, including an indemnity and guarantee agreement on April 10, 2015.
Tuju’s two properties Entim Sidai alongside Tamarind Karen and Dari Business Park, were charged as security for the loan.
The former CS accused the bank of failing to disburse the full amount thereby causing cash flow difficulties for the principal debtor. This allegedly hindered its ability to fulfill its obligations under the agreement.
He said negotiations between the parties ensued in a bid to resolve the dispute and although a settlement agreement was drafted, the bank moved to a UK court and obtained a judgment against him.
Mr Tuju accused the lender of providing $9.1 million for the acquisition of the property but the balance of Sh294 million, which was meant for the development of high-end residential units for sale.He said the sale of the units would have offset the loan.
The bank defended itself saying the balance was never disbursed because Dari Ltd breached the agreement by failing to pay $11,462,757 as at November 10, 2017.
The loans were for the construction of Sh100 million two-storey, flat-roofed bungalows sitting on a 20-acre forested land dubbed Entim Sidai and the purchase of a 94-year-old bungalow built by a Scottish missionary, Dr Albert Patterson, which currently operates as a high-end restaurant.
