Sh240bn Tatu City hits rocky road again

It was launched by former President Mwai Kibaki in October 2010 and billed as Kenya’s biggest real estate project by private investors.

Sitting on 2,400 acres in Kiambu County, the Sh240 billion real estate investment — Tatu City — would see the construction of a modern city, home to about 70,000 residents. The city would boast a well-planned environment of office blocks, shopping malls, industrial parks and homes with manicured lawns.

The project was to be completed in 10 years, according to the original timeline. This means at least half of the work should be complete by now.

However, a protracted court fight pitting Renaissance Group, a Russian investment company that owns a majority stake in the project, against the local investors, delayed the commencement of the work until 2013.

FOREIGN PARTNERS

And the future looks grim for the multi-billion project if the fallout between the shareholders that saw Tatu City return to the courts last week is anything to go by.

It remains to be seen if the project would shake off the shackles holding it back and turn into a prestigious city it was envisioned at its launch.

“We were in court from 2010 to early 2013 when a minority shareholder brought spurious and fraudulent claims against us.

The court decided in our favour on all counts. We will thwart this latest attempt to impede a project that promises huge foreign investment in Kenya and creation of thousands of jobs. We refute all claims brought against us and we have faith in the Kenyan judicial system,” Renaissance Group said.

“Tatu City is now being built very rapidly, and we are extremely excited about seeing the project through to completion.”

Local partners and directors, Mr Nahashon Nyagah and Mr Vimal Bhimji, moved to the High Court saying their foreign counterparts, Mr Stephen Jennings and Mr Hans Jochum Horn, are frustrating the project and have failed to account for the money raised since the project started.

Mr Nyagah, a former governor of the Central Bank of Kenya, also claims to have been kicked out as a director and chairman of the board and Mr Pius Mbugua Ngugi appointed in his place.

Other managers of Tatu City Ltd were also appointed, he said.

Mr Nyagah said in court documents that these actions are being undertaken by the foreign investors to give them exclusive control over the affairs of Tatu City Ltd and Kofinaf, a coffee company on whose land the project sits, so that they “may continue pilfering the capital and income of the company and its assets”.

“There is real danger that such actions will leave the company exposed because the properties of Tatu City Ltd and Kofinaf Company Ltd could be sold, the proceeds siphoned out of the country and beyond reach because they (Jennings and Horn) are not Kenyan nationals and cannot be readily available to account should the project stall or fall,” Mr Nyagah said.

This is the second round of wrangling by shareholders of Tatu City. In 2010, minority shareholders, Stephen Mwagiru and Rosemary Wanja filed two winding-up petitions seeking to dissolve Tatu City Company and its sister Kofinaf, alleging that the majority shareholders sidelined them in the running of the enterprise.

The case delayed the project until early 2013, when Justice Daniel Musinga ruled that the two were “acting unreasonably by seeking to wind up the companies to force a buy-out” on their terms.

ALTERNATIVE REMEDY

The judge told them to pursue an alternative remedy in Kenya and at the London Court of International Arbitration.

The new case has been certified urgent and will be heard on February 27, this year.

Mr Vimal Bhimji declined to comment on the multi-billion project since there is an ongoing court case.

Tatu was the pioneer of the concept of modern cities in the country. In its conception, it was compared to South Africa’s Sandton City — a leafy and highly exclusive surburb in Johannesburg built by the apartheid government.

Other multi-billion real estate developments launched in Kenya after Tatu City such as Centum Limited’s Two Rivers project on the Nairobi-Limuru Road and Garden Estate on Thika superhighway have made remarkable progress.

The construction of Konza Techno City, which shares some similarities with Tatu City, is yet to take off.

Konza city is envisioned to have modern residential property, office blocks and industrial parks just like Tatu City.

Construction of the Machakos city, launched by President Uhuru Kenyatta last year in 2013 is also yet to start.

WARRING INVESTORS

Project delayed by disputes 

• A protracted court fight pitting Renaissance Group, a Russian investment company that owns a majority stake in Tatu City project, against the local investors delayed the commencement of the work until 2013.

•  In 2010, minority shareholders Stephen Mwagiru and Rosemary Wanja filed two winding-up petitions seeking to dissolve Tatu City Company and its sister Kofinaf, alleging that the majority shareholders sidelined them in the affairs of the company.

•  Local partners and directors, Mr Nahashon Nyaga and Mr Vimal Bhimji, are in the High Court saying that their foreign counterparts, Mr Stephen Jennings and Mr Hans Jochum Horn, are frustrating the project and have failed to account for the money raised since the project started.

•  Former Central Bank governor Nahashon Nyaga also claims to have been kicked out as a director and chairman of the board and Mr Pius Mbugua Ngugi appointed to replace him.