How Kenya-Re bought ghost land for Sh550m

Nobody seems to know what happened to the Sh270 million that was squirrelled from Kenya-Re some four months to the 1997 General Election to ostensibly buy a non-existent plot on Kiambu Road.

When the National Land Commission was recently asked to make a decision on this issue, documents tabled before Prof Muhammed Swazuri not only exposed how archetypes of eccentricity saw money leave Kenya-Re but also the intrigues that see parastatals lose millions of shillings.

Kenya-Re had bought air; or put mildly, it lost some money.

Some four months ago, the Directorate of Criminal Investigations described as “pure fraudulent” the title LR12236 IR 73796; a title that Kenya-Re was holding. It also dismissed it as a “Kirinyaga/River Road title” meaning that it was printed in Nairobi’s hub of fake titles. At the moment, that fake title is locked up by DCI Director Ndegwa Muhoro in his office. But that is only part of the story.

To date, the identity of the person or persons who received the Sh270 million, part of the Sh550 million that Kenya-Re paid for the land, remains “unknown” – and it would be interesting to see how Kenya-Re management will follow up that matter — since they were duped in the first place.

Interestingly, part of the land that Kenya-Re purported to buy was once part of Joreth Limited’s land. A few weeks ago, I wrote about the genesis of Joreth Limited, a company that had sold a piece of land in Kasarani to former President Moi. That land is now being claimed by USIU, Equity Bank’s CEO James Mwangi and businessman Dr George Kiongera.

As the Moi-USIU-Mwangi tussle continues in court, the Kenya-Re saga now adds more spice to the aroma of corruption and deceit of the Kanu era. It also allows us to peep into the dealings inside parastatals and how rapacious barons struck pots of gold without a sweat.

The documents have also allowed us to conclude the story of Joreth Limited. While senior politicos in the Kenyatta government had got a slice of Joreth land, once owned by an Israeli, Jacob Hirschfeld, it was not clear what happened to land that President Jomo Kenyatta bought from Joreth and which was bordering Kiambu Road.

Now we have the story – and it is the land that Kenya-Re sought to buy.

The deal would later land media mogul Samuel Kamau Macharia and former civil servant Joseph G. Kibe in court for fraud, but they were released.

(The court ruled that it was a civil matter and that former Gatundu MP, Ngengi Muigai, was trying to get his share through criminal litigation).
Welcome to the saga.

To understand the intrigues, and if you have been to Kiambu Road, the land is all that empty space between the Directorate of Criminal Investigations (DCI) headquarters and Rib Shark Restaurant and opposite Karura Forest.

LARGEST BLOCK AVAILABLE

As noted before, Jacob Hirschfeld’s Joreth landholding was expansive and covered parts of modern-day Ruaraka, the whole of GSU headquarters, Thome Estate, USIU, Garden Estate, NYS headquarters and touched on the land adjoining Windsor Golf Club.

Since it was the single largest block available north of Nairobi city after independence it became the playfield for politicians and civil servants eager to buy — or grab — a slice of it.

This Kenya-Re story starts in October 1975 when Joreth Limited instructed their land consultant, Mr F.E. Chranley, to sub-divide the section of their land next to Karura Forest into four portions of equal size. In the approved scheme of sub-division, part of Karura Forest was to be exchanged with an equal area of Joreth land and this was approved by the Commissioner of Lands and confirmed by the Director of Surveys.

Thus, Joreth lost 5.63 hectares to Karura Forest and the new sub-division from the original land (LR 216/4R) and measuring 38.39 hectares was allocated LR No 216/8. The surrendered 5.63 hectares are today occupied by the National Intelligence headquarters.

These details are important because of what would transpire later. In order to compensate Joreth for the lost land, a portion of land measuring 1.9 hectares was excised from the forest and allocated LR No 12261 and was to be consolidated with LR 216/8 which was to be owned by Jomo Kenyatta. Actually, what was hived was about 15 acres of Karura land — and though Kenyatta had indicated that he only required his right portion, the matter was never finalised before he died in 1978.

As the estate of Jomo Kenyatta started consolidating their wealth after his death, they decided to sell this property in 1982 and a new company Sceneries Limited was founded to purchase the land.

The company had Nairobi lawyers George Waruhiu, Grace Githu, politician Ngengi Muigai, and businessmen Samuel Kamau Macharia, Solomon Karanja and Joseph Kibe. But in the end, only Macharia, Kibe and Muigai remained in the company as the others opted out.

It is this Sceneries Limited which bought this Kenyatta land in 1982 and then drama started. While the three owners of this company were hooked by a common investment, they were politically opposed to each other.

Muigai, a nephew of Jomo Kenyatta, had a dalliance with the opposition Democratic Party before he later settled into Kenneth Matiba’s Saba Saba Asili. Both Macharia and Kibe had allied themselves to Moi’s Kanu and were members of a lobby-group, Central Province Development Group, led by Nairobi architect George Nyanja and which brought together central province millionaires to campaign for Moi’s re-election in 1997.

Another member of this group was William Mbote, the Managing Director of Kenya-Re. Mbote had earned a name after he became the sole opponent of Kenneth Matiba in the 1992 General Election as MP for Kiharu on a Kanu ticket. He polled 784 votes against Matiba’s 57,000.

It was during Mbote’s tenure that both Macharia and Kibe decided to sell the Sceneries Limited land to Kenya-Re at a time when everyone was focused on the duel between Kanu and Kibaki’s Democratic Party, after Matiba decided to boycott the elections.

It is not clear why Kenya-Re wanted this land but we now know from the transaction records that it paid Sh550 million for property LR 216/8 which included a parcel that was identified in records as LR12236 I.R. 73976. This amount was received in August 1997 and both Macharia and Kibe, acting for Sceneries Limited, wrote to their lawyer, Kirundi and Co Advocates, on how to share this money.

FINAL AUTHORITY

The letter dated August 25, 1997 says: This is the full and final authority for you to pay and/or distribute the proceeds from the buyer.

In the instructions, the law firm was instructed to purchase bearer certificates of deposits as follows: 15 certificates of Sh10 million each, 10 certificates of Sh5 million each, 10 certificates of Sh1 million, 10 certificates of Sh500,000 and 11 certificates of Sh5 million. The total amount was Sh270 million.

These bearer certificates allowed whoever was the bearer to cash them for money – and was one of the schemes used in 1990s to loot various parastatals and became the conduit in which Goldenberg scandal cash was dispensed.

The balance of the money was paid to Kibe (Sh112.5 million) and Macharia’s Royal Credit Limited was paid a similar amount. The extra Sh55 million was to be paid to the law firms of Kirundi and Advocates (Sh15 million), Mohammed and Muigai (Sh20 million) for their legal services and two individuals: J. M. Githongo (Sh10 million and Lee Ngugi (Sh10 million).

So what had Kenya-Re bought?

Let’s go back to the land. When Kenyatta sought to buy the land from Joreth, some 15 acres of Karura Forest used to occupy both sides of Kiambu Road and thus Kenyatta’s land had no access to Kiambu Road. He agreed to exchange some 15 acres of his new land to get access to the road. The land Kenyatta returned to the government is now the headquarters of National Intelligence Service.

When Kenya-Re decided to purchase this land both Macharia and Kibe had purported to consolidate the original LR 216/8 (the former Kenyatta land) and LR 12236 (the former forest land bordering Kiambu Road). This could not have been possible since the Sceneries title had a caveat.

But somehow, they managed to get a title LR12236 IR 73796. The problem was that Kenyatta died before LR 12261 had been degazetted as a forest and there was no way it could have been consolidated with LR216/8 to form one title. Actually, the Ndungu Report had recommended the revocation of LR 12261 stating that it was part of forest land.

The import of that was Sceneries Limited, or rather Macharia and Kibe, could not have sold LR 12236 to Kenya- Re since it did not exist in law. That matter was first raised in Parliament in 1998 when Prof Peter Anyang’ Nyong’o sought to know from the government whether it was aware that Kenya-Re had bought land on Kiambu Road which had a caveat.

RECOVER ANY MONEY

Then assistant minister for Finance Mathias Keah told the House that title LR12236 was a “clear title” and the government was not willing to recover any money. And would not even name the vendor of the land. “That property was clean … Kenya-Re obtained a clean title … (and) that transaction was done during the days of Mr Mbote as managing director,” said Mr Keah.

When the commission was asked to determine the authenticity of the land purchased by Kenya- Re, it found that when the parastatal bought the purported LR 12236 in June 1997 that title did not exist since it was never registered and also consisted of gazette forest land — the portion that was to be exchanged. Thus, no consolidation could have happened.

The commission found that a fake title was prepared and sold to Kenya-Re. “the Commission observed with curiosity that the deed plan used in the title for LR 12236, sold to Kenya-Re, is still deed plan no 98742, issued on March 25, 1976 when it was still part of the forest but was now re-issued on 27 June 1997, with the same number,” wrote Prof Swazuri.

On the same date (June 27, 1997), Land control board consent was received, registration of title was done and transfer to Kenya-Re was completed. That is how fast the transfer was done.

“There is no evidence of an official search of the title having been done to confirm its existence”, writes Swazuri, yet Kenya-Re went ahead and purchased the property.

It is now known that the registration of title LR 12236 was done after the sale and transfer of the property. “Kenya-Re may have purchased nothing,” ruled Swazuri.

The Director of Criminal Investigations has stated that this title is “fraudulent.”

In a classic case, the commission has now ordered that both Macharia and Kibe forfeit their share of Sceneries Limited land (71.14 acres) worth billions of shillings today and that Muigai receives 23.7 acres. Joreth Limited is also to get LR 12261 because it had surrendered parts of its land to the Forest Department.

But the main question that has not been settled is about the people who got half of the money that came from Kenya- Re. That is the million dollar question which Kenya-Re has to grapple with for years.

Recently – April 28, 2016 – Kenya-Re, through their advocates Okwatch and Co, wrote to the Director of Criminal Investigations seeking to get the fraudulent title back. The lawyer was told that the title “was confirmed through investigations as a Kirinyaga Rd/River Road title which was purely fraudulent … consequently, the DCI has declined to release the fraudulent title to you. Our inquiry file is still with the DPP awaiting his advice in relation to prosecution”, said the letter. Perhaps, we have not heard the last of this Kenya-Re saga.

[email protected]; @johnkamau1