Medics, among them doctors and pharmacists, are locked in a vicious battle for the control of prime properties in Upper Hill, Nairobi, with an estimated value of more than Sh4 billion.
A group of 1,400 medics, under the Kenya Medical Investment Company Limited (KMIC), claim to have been excluded from the running of the properties yet they contributed money towards their construction.
The aggrieved medical practitioners claim to have contributed more than Sh300 million towards the construction of the seven-storey KMA Centre and adjacent block of flats, all of which sit on a three-acre plot.
EQUITY AND DEBT
The Sunday Nation has established from people with knowledge of the project that the piece of land was given to the Kenya Medical Association (KMA) by former President Daniel arap Moi in the 1990s.
KMA and KMIC then partnered to develop the plot through a jointly-owned company, Kenya Medical Properties Limited (KMPL), in which KMA had 60 per cent shareholding while KMIC 40 per cent.
Construction of the property was financed through a mix of equity and debt. Equity Bank, CBA, Bank of Africa and Co-operative Bank provided loans for development financing of the KMA Centre complex.
The project, which was officially opened by President Mwai Kibaki in November 2012, comprises 78 apartments made up of 24 single-bedroom units, 30 two-bedroom units and 24 three-bedroom units. It also has a 500-seater amphitheatre, a restaurant and a health club.
It is indicated on the KMA website that a one-bedroom flat is being sold for Sh12.6 million and is being rented out for Sh70,000; a two-bedroom house goes for Sh17.4 million and is rented at Sh80,000 while a three-bedroom unit is being sold at Sh19 million and rented out at Sh90,000.
Businesses that have rented the complex include Java Coffee shop and the German Medical Centre. Investors were to earn dividends from the rental income generated from the houses and the office block, now fully occupied.
However, a search at the registrar of companies indicated that KMPL is wholly owned by KMA (999 shares) while Dr Elly Opot Nyaim owns a share. The medics’ firm, KMIC, owns nothing in the project.
On Saturday afternoon last week, this reporter attended a stormy extraordinary annual general meeting at the KMA Centre auditorium that had been called by the aggrieved doctors who said that they had not been paid a dividend for their investments, seven years since the building opened for business.
“We have been kept in the dark about the goings on here yet we hear the flats and the offices have almost sold out,” said Ms Wanjiku Nduati, a lawyer representing one of the aggrieved medics. “Some of us took loans to invest in this project but we are yet to see a cent in returns.”
The directors of KMPL are listed as Dr Elizabeth Wala, Dr Andrew Juma Suleh, Dr Uday Natverlal Gandhi, Dr Nyaim and the KMA. Dr Josephine Kitulu, who is the current president of KMA, and Dr Simon Kigondu, the secretary-general of the same company, declined to respond to our requests for comment.
But Dr Wala told the Sunday Nation that she had resigned as a director of both KMIC and KMPL two years ago. “The role of the registrars is to change directors,” she said. “If they haven’t then it’s not my fault. I have my resignation letter and their letter of the receipt of the same two years ago.”
Dr Wala, a former CEO of KMA, added that she is still a shareholder at KMIC. “I invested my hard-earned money,” he said. “All questions should be directed to the board of KMIC.”
Dr Nyaim, who was the chairman of KMA from 2012 to 2016, said the one share he is indicated as having at KMPL is a nominal share that was necessary for the formation of the firm (KMPL) at the time.
“I was allocated this share when I was the treasurer of KMA,” he said. “When my term ended, it was supposed to be automatically transferred to the next holder of office, and so it is not right to say I am holding it on my own behalf.”
According to Dr Nyaim, doctors were expected to raise Sh800 million for the construction of the complex, but only managed to raise Sh300 million. “This diluted the stake of KMIC in the project from the initial 40 per cent to around 15 per cent,” he said.
The loans to pay for the project, he said, were taken in the name of KMA and not any other entity.
“To the best of my knowledge, we still have an outstanding loan of about Sh500 million. We have never broken even for us to pay a dividend,” he said.
Dr Wahome Ngare, the only board member of KMIC who was present, was hard-pressed to convince the enraged investors not to run afoul of the law as they elected 11 new board members last week on Saturday.
During the stormy meeting, Dr Aluoch Joseph Amolo, one of the aggrieved investors, faulted the younger doctors for snubbing the company’s meetings whenever they are called.
“Most of you here never show up for meetings whenever they are called and are now complaining the most,” he said, as it emerged that KMPL has not held annual general meetings since 2014 or filed annual returns.