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New battleground in raging Karume property dispute

Sunday August 12 2018
Dn Karume Court 2803 tr.JPG

Lawyer Peter Munge (right) has been representing Njenga Karume's children in a dispute between them and trustees of their late father's estate. PHOTO | FILE | NATION MEDIA GROUP

By EDWIN OKOTH

For those who remember James Njenga Karume, politics, wealth and the long walk from rags to riches as captured in his autobiography three years before he died in 2012 remain central in memory.

He is also remembered to have been one of the wealthiest men who were keen on how each coin was spent; perhaps the reason he envisioned the existence of his empire to perpetuity by committing it to a trust run by some of his closest confidants.

CORRIDORS OF JUSTICE

Six years after his death, however, the cracks into the smooth vision he left have only grown deeper.

The name of the long serving politician, who succumbed to cancer in March 2012, resurfaced earlier this week after his family members were shocked to see an advertisement in the Daily Nation inviting buyers for 11 parcels of land totalling 111.2 acres and the iconic Village Inn which went under in 2015.

The advertisement triggered a bitter battle and for a family that has been split in the corridors of justice multiple times, the war is about to rage on.

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MISMANAGEMENT

This week, lawyers representing three children who had in 2015 attempted to throw out the trustees Mr Karume appointed to run his multibillion shilling empire will be moving to court to file contempt proceedings against the trustees, accusing them of mismanaging the politician’s wealth.

At the centre of the dispute is how close to Sh500 million has been spent after multiple property sales of Mr Karume’s land in Kiambu County.

Copies of fiery letters have been sent to both the trustees and the property dealers, who advertised the sale, warning them of dire consequences should they proceed.

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Lawyer Peter Munge, who represented three of Mr Karume’s children — Albert, Samuel and Lucy — in seeking the ouster of the trustees, first wrote to property dealer Tysons Ltd giving them 48 hours to cancel the advertisement.

“In the premises, we do demand as we hereby do that you forthwith cease from dealing with the said properties and also cancel the intended sale by way of similar advertisements noting that unless we receive your favourable confirmation within 48 hours we shall commence contempt proceedings against Directors of Tysons Ltd,” read the letter dated August 9 and copied to six other law firms.

BENEFICIARIES

In the letter addressed to the trustees, details of the alleged mismanagement of the politician’s property are revealed. The lawyers painted a picture of property being sold and money unaccounted for as beneficiaries struggle to meet basic needs including health and education while others risk legal suits for unpaid taxes.

Apparently, after the courts stopped payments of proceeds from the sale of Kacharoba farm, the two sides agreed to allow for the release of some Sh140.6 million to settle tax arrears accrued by Jacaranda Hotel and cater for medical bills for one of Mr Karume’s grandchildren.

DEMAND

Neither has been settled, according to Mr Munge with the sick family member said to have been detained momentarily at a hospital in Nairobi.

The agreement is also still a subject of dispute as the trustees’ lawyers are said to have resisted requests to give a copy to Mr Munge and instead used it to sell more property, an act he describes as "unprofessional".

“Regarding the sale of 40 acres of Kacharoba farm, we have demanded several times to be furnished with statements or schedule showing how the proceeds therefrom have been expended. In response to our last demand, we received the email communication of July 24, 2017 that enclosed some attached documents. There is no clear schedule showing how the entire proceeds from sale of 40 acres was expended and/or disbursed,” reads the letter to the trustees.

FIERCE FIGHT

Among the contested payments include a Sh41.7 million difference between the sum received from the buyers and what was captured in the sale agreement for the 40 acres.

Also on the advocate’s radar is a Sh33.7 million paid to Kacharoba Ltd in October 2016 whose use they say remains unclear.

The trustees’ lawyers are also said to have received two payments totalling Sh14 million in June 2017, payments now being questioned by the advocate representing Mr Karume’s children who believe the money's purpose remains unclear.

The latest payments in March 2018 of Sh65 million made to Jacaranda Hotel is also being questioned in what is likely to trigger another fierce fight between the Karumes and the people entrusted to manage the politician’s vast wealth.

TRANSACTED

“There were numerous payments made to the Trust on diverse dates, including the sum of Sh192.2 million that was paid on December 20, 2017 and we would be glad to know the purpose for all such payments and how the sums therein were utilised,” the lawyer wrote.

Questions are also being raised about an extra 10 acres sold at the Kacharoba farm. A reduction in price by close to Sh2 million to Sh7 million per acre was recorded. This is despite the acres being a portion of the same property earlier sold at Sh8.9 million per acre. The deal is also said to have been transacted secretly, according to the lawyer.

“In view of the above, we have instructions to go to court for orders to stop the sale of any further properties by the trustees as they have been unable to account for proceeds of the first transaction of 40 acres and also secretly sold a further 10 acres at a loss without disclosing the issue to the parties or the court that was supervising the sale,” added the letter.

SPLIT FAMILY

The politician’s estate is not new to disputes which have pitted his children against the trustees he appointed before his death in 2012 (George Warieri, Kung’u Gatabaki and Margaret Nduta Kamithi).

A family source, who requested not to be named, said the trustees have been operating without consulting the family.

So bad has been the situation that the latest tussle is likely to split family members as a few have been said to agree with the trustees to benefit at the expense of the others. The dispute has seen a mediation team of religious leaders and family friends fighting to stitch the family together.

Wealth management experts, however, contend that such splits are avoidable with proper structuring of trusts to manage one’s wealth after death and the family split may be a result of a haphazardly structured trust.

LASTING LEGACY

Enwealth Financial Services Board member Kennedy Monyoncho said the choice of whether to leave wealth in the hands of family members or trustees depends on how long one may want his legacy to last and benefit generations to come.

He said the concept has largely been hard to adopt in Africa where family members fail to respect wills of their deceased kin and view trustees as “outsiders”.

“A trustee is someone you should send with money to deliver to your mother and have it delivered with or without your follow up. Wealth left to trustees should go into perpetuity or offloaded to people of your choice, many generations late. If you hear such disputes and claims of wealth being mismanaged, it is because of loopholes existing in the trustee agreement,” Mr Monyoncho said.

GROUND RULES

He, however, maintained that one must be certain about the trustees to leave wealth under and have family members properly briefed on what the trustees are supposed to achieve.

Another wealth management expert Peter Wairegi, author of Wealth Preservations: The 7-Key Steps of Effective Will and Estate Planning Strategy, agreed that Kenyans still have a cultural challenge in accepting the concept of wealth management through trustees.

He said more time could also have allowed Mr Karume’s family and the trustees to bond just like the late John Michuki did in planning the management of his wealth.

“People still find it hard to even trust their spouses and that is why you see so much money being held by the unclaimed asset authorities. Karume decided on the idea just shortly before he died and that did not give sufficient time to lay ground rules and agree on what is to be done. Earlier planning can save a family from such conflicts,” he said.

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