Karume’s children seek to replace tycoon’s trustees

Children of the late billionaire businessman and politician Njenga Karume have gone to court seeking the removal of trustees of their father’s estate over what they say is wanton theft and wastage of the property.

They are also accusing the trustees of neglecting them and the tycoon’s grandchildren.

The trustees are accused of treating Mr Karume’s children with contempt, refusing to pay school fees and medicals bills even as they gobble up hefty monthly allowances.

The suit charges that two of Mr Karume’s grandchildren, who are students at the Nairobi International School, are due to sit examinations but their fate hangs in the balance after a Sh200,000 cheque issued by the trustees to the school bounced.

It has been revealed that another Sh300,000 cheque issued to Gems Cambridge School in January also bounced.

FINANCIAL QUAGMIRE

Additionally, three other grandchildren, one of whom is a candidate, have been in and out of Braeburn School after the trustees paid less than half of the fees due to the institution.

Another grandchild studying in California has fallen behind in school and is said to be in financial distress following neglect by the trustees.

Court papers reveal that at one point, the trustees asked one of the grandchildren to stop contesting their decisions so that they could resume paying school fees.

“That notwithstanding ... the same trustees have been paying fees for children of new staff they hired at Jacaranda Hotel at Sh2,051,429 a term as borne out in the annexed copies marked,” says Mr Albert Kigera Karume in the suit papers. A long-time board member of the hotel group resigned last December in what appears to be part of the fast-paced script peppered with claims and counter-claims of betrayal and debauchery.

Mr Kigera says in the suit that his sister, Ms Teresia Njeri Karume, has been unwell but appeals for an increase in her allowances or medical cover had fallen on deaf ears.

“As a consequence of the trustees refusal to assist in paying for medical care the condition of the said beneficiary has worsened, leading to kidney failure,” says Mr Kigera.

The children want Mr George Ngugi Waireri, Mr Kung’u Gatabaki and Ms Margaret Nduta Kamithi replaced in what promises to be an epic battle for the multi-billion-shilling empire.

On Friday, the High Court certified the matter as urgent and issued temporary orders to the trustees not to sell, transfer, charge, mortgage, dispose of or waste in any way the immovable properties held under the Njenga Karume Trust for a period of 14 days.

They were also barred from dealing with Pizza Garden in Westlands for 14 days.

The order was served on the construction workers at the site yesterday. The court has fixed a hearing date for all parties on April 9.

The children say that the trustees operate in an opaque manner and are also questioning the legality of the some of the transactions that have taken place since their father died three years ago.

They have also accused the trustees of using the powers bestowed on them by Mr Karume to open and operate bank accounts without the knowledge of the beneficiaries— Mr Karume’s children and grandchildren.

The suit is an addition to another filed late last year as Mr Karume’s best laid plans to secure his business and family legacy appear to have come unstuck.

The parties appeared before Lady Justice Lydia Achode in December last year where she directed that the family and trustees make attempts to resolve the dispute out of court. She directed that they return to court after three months if this did not succeed.

Three of Mr Karume’s children have now gone back to court after the period lapsed where they also claim that the firm of Iseme Kamau and Macharia Advocates had denied them a copy of the trusteeship documents “signed by our father, for reasons not known to us”.

CREATED A TRUST

The tycoon died three years ago and created a trust that would oversee his vast business interests — estimated at about Sh100 billion — on behalf of his children, grandchildren and great grandchildren.

But three of his children — Albert Kigera Karume, Samuel Wanjema Karume and Lucy Wanjiru Karume — went to court seeking to remove the trustees. They say they are qualified to run the businesses and are asking the courts to replace the trustees in running the vast estate to prevent further financial losses.

The battle is exposing what has been described in court documents as “mismanagement and vandalism” of the estate allegedly executed by the trustees in whose hands Mr Karume left his multi-billion-shilling properties spread across the country from Nairobi to Kiambu, and Nakuru to Mombasa.

The dispute first erupted in November last year but there had been a lull until Thursday this week when additional papers were filed in court making shocking claims against the people whom Mr Karume trusted to preserve and grow his financial empire and familial progress.

Four other children have been named in the suit as interested parties.

The three who have sued have questioned the manner in which two new trustees were appointed after the exit of the first chairman, Justice Paul Kihara Kariuki and “without any notice or reference to the beneficiaries of the trust”.

Justice Kariuki is the president of the Court of Appeal and a long-time family friend of the Karumes, but he resigned from the trust soon after Mr Karume’s demise.

The three children who are suing have also made a startling claim that they do not know the whereabouts of Sh1.1 billion raised from the sale of a piece of land by their father to Kenya University Staff Retirement Benefits Scheme.

They say that Mr Karume had instructed the firm of Iseme, Kamau and Macharia Advocates to sell the land with a view to settling any debts before he died.

“I am well aware that the aforesaid transaction was concluded at the time the founder was ailing with cancer and I do verily believe that as at the date of his demise, all bank loans or debts ought to have been settled. However, the beneficiaries have no information on whether the existing debts were settled as intended by the founder as the trustees have failed to involve the children of the founder in dealings on his estate or business empire,” Mr Albert Kigera Karume says.

“I am also well aware that a sum of about Sh280 million was left intact by the founder as at the time of his demise in an account at the Co-operative Bank of Kenya for purposes of settling any other debts that may arise and to develop Indian Ocean Beach Resort in Ukunda within South Coast and Pizza Gardens in Westlands within Nairobi,” he adds.

Mr Kigera then says that his siblings, nieces and nephews have been unable to access any information on how the money was spent if at all. He has attached bank statements which show that payments were made to the trustees on a regular basis.

The documents show that the chairman of the trust, Mr Waireri, has been drawing about Sh500,000 in monthly allowances from the trust with the other trustees following in tow. Yet monthly allowances to some of the children have been stopped altogether, according to the court documents filed this week.

Further, Mr Kigera, who is represented by lawyer Peter Munge of Mungai Muriu and Company Advocates, says the trustees have borrowed Sh200 million from the Cooperative Bank and a further Sh200 million from GT Bank “without consulting the beneficiaries”.

Mr Karume, a former Cabinet minister who died in 2012, initially wrote a will dated February 19, 2009, which he revoked and replaced with a new one where he formed a trust in June 2011, about eight months before he died.

In the November filing, his daughter, Ms Lucy Wanjiru Karume, said in suit papers that mismanagement of their father’s estate had resulted in the closure of Village Inn Restaurant near Kiambu town and that their father’s entire business empire, which was thriving before he died, is headed for collapse unless the court intervenes and orders reorganisation of the management of the estate.

Back then, lawyer Munge acting for three of the children wrote to Iseme, Kamau and Maema (IKM) Advocates — representing the trustees and executors — asking for a meeting to resolve the contentious issues.

SURPRISED BY CLAIMS

But IKM responded that their clients were surprised by the claims of mismanagement and that as far as the trustees and executors were concerned, there had been no breach of law.

Ms Wanjiru says in her petition to court that after their father passed away, the children were called to the IKM offices in Nairobi and directed to sign documents indemnifying the trustees from any losses and stating that “we shall not question any action by the trustees as a condition for receiving allowances from the estate and trust.”

She claims that those of her siblings who signed the document “under duress” have been receiving a Sh200,000 monthly allowance which she does not receive because she refused to sign the document.

The trustees have not formally responded to the two suits filed in court.

Lawyers for the trust yesterday sent the Sunday Nation a letter from Cianda Estates Ltd from the company chairman S. Kigera Thuo, who says the money was appropriately handled by the lawyers and trustees.