International Casino: State gamble that didn’t pay off

The recent demolition of buildings located at Museum Hill, commonly referred to as International Casino, is a symbol of good intentions gone bad by the government.

The prime property, which was first leased to an Italian linked gambling company in 1968, has changed hands so many times including to fugitive Ketan Somaia and Goldenberg brainchild Kamlesh Pattni.

It has been the subject of many court battles and mysterious change of ownership and caveat emptor that have culminated in the demolitions.

It has hosted a church, Bubbles Discotheque, Galileo, Club Afrique, Blue Times and Ale House among other businesses.

Previously, the land was supposedly sold by National Credit Bank to Galaxy Walker Ltd but it is Azarel Investment Limited that planned to develop it despite a caveat emptor placed on the property by the government.

The journey first began on October 1st 1968 when the Government of Kenya awarded Tourist Paradise Investment Limited a fifteen years lease for one decimal five eight seven (I.587) hectares L.R No. 209/7437 (originally L.R. No 209/71/4).

Seven years

However, the lease was given on condition that “no further buildings shall be erected on the land nor external alterations be made to any buildings otherwise than in conformity with plans and specifications previously approved in writing by the Commissioner of Lands and Local Authority. The Commissioner shall not give his approval unless he is satisfied that the proposals are such as to develop the land adequately and satisfactorily.”

At the expiry of the lease, the land buildings, all improvements and equipment were to revert to the ownership of the government without payment of any compensation.

The lease was renewed on 10th March 1982 by the then Commissioner of Lands James Raymond Njenga and registered on 8th May 1983 for seven years.

On 22nd September 1994, the then Commissioner of Lands Wilson Gachanja renewed the lease for another 19 years.

The parcel of land had been registered at the Nairobi Lands Registry as Volume No. 45 Folio 331/25 and given to Tourist Paradise Investment Limited on condition that an annual rent payment of Sh18,000 is made along with various conditions.

Casino license

The agreement reached between the government and Tourist Paradise Investment Limited executed on 7th June 1968 granted the investor a casino license to operate casinos in Nairobi, Mombasa and Diani Beach upto 1990.

Tourist Paradise Investment Limited would then surrender the property together with the buildings and any other equipment on 1st November 1990 unless further extension was awarded.

It was expected that Tourist Paradise Investment Limited would ensure the operation of the casino were conducted with decency, dignity, honesty and good taste.

However, the government undertook to endorse the Mombasa Island / Block XVI/334 for use as a casino until 31st October 1990, endorse title to Mombasa/ Mainland South/ Diani Beach permission to use casino until October 1990, endorse the importation of free of duty of equipment and other material required for the construction and running of casinos and to grant a quota of immigration into Kenya of up to eighty expatriate personnel to work in the casinos.

Although the Betting Control and Licensing Board chairman on 29th June 1993 informed Tourist Paradise Investment Limited of their intention to extend the lease for a further ten years, it was never done formally.

But on 14th November 1994, Tourist Paradise Investment Limited charged all the property on L.R. No209/7437 and the buildings to the National Credit Bank Limited for a Sh60 million loan.

Consent for that loan was given by the Commissioner of Lands on 8th December 1994.

On 15th June 2000, Tourist Paradise Investment Limited further granted a debenture and guarantee to National Credit Bank Limited as a further security for security on the existing loan facility of Sh100 million without the consent of the Commissioner of Lands as required by the Grant IR.No.36538.

Tourist Paradise Investment Limited sublet parts of the business on the property without the mandatory written consent from the Commissioner of Lands.

Although it was an express term of the agreement that Tourist Paradise Investment Limited would remit a 1.5 per cent of the monthly gambling wins as training fee, they refused, failed and neglected to pay a total of Sh11 million.

Until 30th June 2000, Tourist paradise Investment Limited had also refused and neglected to pay overall monthly winnings of 12 per cent gaming tax amounting to Sh80 million.

Tourist Paradise Investment Limited had also not paid land rent forcing the government to put caveat emptor on the property.

But this did not stop Tourist Paradise Investment Limited from continuing to conduct business on the said property.

After Tourist Paradise Investment Limited into which business Ketan Somaia had acquired 80 per cent shareholding failed to service the Sh180 million loan, the bank sold it to Galaxy Walker Ltd.