How senior officials sold ‘Moi’s land'

Twenty-seven years ago, Kenya Commercial Bank almost sold a controversial prime piece of land claimed by former President Daniel Moi to recover a Sh10 million loan that was taken by senior officials in his government.

This is the land that the retired Head of State sold for Sh500 million to businessman George Kiongera two months ago, provoking a high stakes dispute with United States International University - Africa, which is claiming ownership. The dispute has since moved to court.

Documents seen by the Nation show that one-time Finance minister Arthur Kinyanjui Magugu and Central Bank of Kenya Governor Philip Ndegwa were directors of DPS International, the company that took the KCB loan.

The company is at the centre of the current land saga because eventually, as confirmed by its lawyers, it sold the same piece of land for Sh17 million to Insurance Company of East Africa (ICEA), a company associated with Mr Ndegwa, on February 26, 1990.

ICEA then pocketed Sh90 million from USIU-A and transferred the land to the university on May 4, 1999.

The Directorate of Criminal Investigations (DCI) has since moved to probe the deal. Head of the Lands division at DCI headquarters Abdallah Komesha said his officers have recorded “so many statements”.

“This matter is still under investigation and because this unit deals with land fraud, we are therefore investigating fraud. Though we have taken statements I cannot reveal names (of the suspects) at this time,” he said.

But as the controversy continues, it has now emerged that some time on June 28, 1988, a meeting attended by Mr Magugu and Mr Ndegwa, as well as a Mr U. Horvitz, as directors of DPS, resolved to sell Mr Moi’s land in order settle the Sh10 million bank loan.

In an earlier statement, lawyers for DPS, Ndung’u Njoroge and Kwach, said DPS obtained the land from Mr Moi on November 10, 1988.

Why was DPS discussing to sell land it did not own at the time? Secondly, how had DPS obtained the loan, in 1983, and deposited titles that were not in its name?

‘LOOK ELSEWHERE’

Contacted, Mr Paul Ndung’u, the company’s lawyer, said: “My position is very simple. I don’t want to engage with you on this matter. Look for information elsewhere.”

KCB and Hamilton Harrison & Mathews, the law firm that initially handled the deal, had not responded to our queries by the time of going to press.

Last month, the former President through his lawyer denied ever selling the land to DPS.

DPS was formed in 1982 and the initial directors were Ammon Zas, Eliud Shilo and Y Laniado. Initial shareholders were Paul Nderitu (Ndung’u), Michael Lewis Somen and Solel Boneh.

At the time, Mr Ndung’u and Michael Lewis were lawyers at Hamilton Harrison & Mathews. Solel Boneh was the Kenyan outfit of Solel Boneh International (SBI), an Israeli company based in Haifa. The law firm which transacted the sale for USIU-A in 1999 was Ndung’u Njoroge and Kwach. Currently the university is represented by Mr Paul Muite.

Documents seen by the Nation say DPS was formed to undertake a housing project on the land.

“The idea of promoting the project was agreed between yourselves and our company as early as September 1982 in a series of meetings held in Geneva. The land for the project was purchased through a loan granted to DPS by KCB,” according to a letter dated August 30, 1989, which was written by SBI managing director Amos Salomon from Haifa.

The letter addressed to Mr Magugu and Mr Ndegwa reveals that more than six years after taking the loan, the project had not taken off and proposed the land be sold immediately to settle the debt.

“The project was not realised for reasons that are not relevant now. Several attempts were made to this end. The first prospective buyer Mr Kirubi, withdrew his offer of Sh18.5 million in April, 1989. Mr Pandit made a precedent to his offer of Sh16.5 million concerning changes in land zoning,” Mr Salomon said.

PAYING INTEREST

SBI had been paying interest for the loan for more than six years. But the company stopped payments as Mr Salomon put it in a letter: “In view of the situation and that the yearly interest of Sh1.5 million made by us over more than six years, we are left with no alternative but to cease interest payments to the bank”.

Mr Ndung’u wrote to Mr Ndegwa on October 5, 1989 warning that KCB was likely to auction the land.

“In our view the properties should be put on market again. It will undoubtedly be some weeks or even months before any serious offers are received. It seems to us that we are losing valuable time,” he said.

The letter was copied to Mr Magugu and Y Laniado, a director of DPS.

The following day, Mr Ndung’u wrote again to the three, this time saying he had received a letter from HH&M asking for the title deeds.

He wrote, “You will note that, as I feared, I have now been required to return the title deeds. I’m sure HH&M will immediately register the charge in favour of the bank, who will then proceed to have the properties advertised for auction.”

This letter by HH&M, seen by the Nation said: “On our clients instructions we hereby request you to give us the documents sent to you in compliance with professional undertaking set out”.

It was copied to the KCB manager at Moi Avenue, Nairobi. Mr M.N. Kioko, the account manager at KCB, wrote to DPS on October 13, 1989, demanding Sh237, 646 as interest accrued between September 1989 and October 12, 1989, following the action by SBI.

At this point, the way out was to sell the land and settle the loan otherwise the interest would continue to increase.

Six days after KCB’s demand, Nairobi Homes wrote to Mr Ndung’u, saying they had found a buyer who was willing to pay Sh16 million for the land. With renewed hopes, Mr Ndung’u communicated the good news to HH&M.

He said in the letter dated October 24, 1989: “Under these circumstances, may we retain the title deeds for a bit longer?”

Mr Ndegwa wrote to his partner Mr Magugu on November 1, 1989, expressing urgency to sell the land.

“I shall also make some personal efforts in looking for a buyer of these plots. The offers are on the low side and I don’t think I can find a buyer for Sh17 million. As agreed I shall proceed on that basis,” he said.

This is how ICEA, a company largely owned by Mr Ndegwa, bought the land at Sh17 million.