Tuju fails to stop bankruptcy suit

Thursday July 09 2020
tuju pix

Cabinet Secretary Raphael Tuju. PHOTO | FILE | NATION MEDIA GROUP


The High Court has rejected a bid by Jubilee Secretary-General Raphael Tuju to stop bankruptcy proceedings against him over a debt of Sh1.6 billion.

Mr Tuju had argued that the Court of Appeal had stopped all the cases related to the amount owed to the East African Development Bank (EADB), including a suit by the bank to have him declared bankrupt.

EADB had also filed an application seeking to allow receiver managers take over the politician's property in Karen and contempt of court case against him, for barring the managers from accessing the premises.

But Justice Mary Kasango ruled yesterday that the Court of Appeal only suspended an order requiring Mr Tuju to pay Sh1.6 billion, on condition that he deposits Sh50 million in an interest earning account, within 30 days. The judge said it was not clear whether the politician deposited the amount.

Mr Tuju and his children moved to court on January 10, after the bank gave them 21 days to pay $16,550,608 (Sh1.618 billion) with interest, failing which the bank threatened to file bankruptcy suit against them.

They sought to have the demand set aside on the grounds that the guarantee is a secondary obligation and that the debt is secured.


The children, Yma, Mano and Alma, said in opposition to the suit that Dari Ltd was able to and had reasonable prospects of repaying the debt.

“I am advised by my counsel on record, which advice I verily believe to be true, that a guarantee does not create an original debt and therefore the relationship between the creditor and the guarantor should not be examined separately from or outside the context of the lender-borrower relationship from which the guarantee emanates. For this reason, it is vital that the court considers whether the debt is secured,” Mano said in an affidavit.

READ: Bank eyes Tuju children over Sh1.6bn debt battle

ALSO READ: Tuju firm placed under receivership in Sh1.6bn debt row

The Tujus said a valuation conducted on the property in 2015 indicates that the property has a combined market value of Sh1.84 billion, which is in excess of the amount being demanded.

“The failure on the part of the creditor to comply with the law and to acknowledge the full extent of the securities held is selective disinformation and is wilfully designed to mislead the court,” Mano added.

For its part, EADB said the guarantee is not disputed and that the liability had already crystallised. The bank further said they do not hold any security over the assets of Dari, the principal debtor.