Reviving the fortunes of Karume empire - Daily Nation

Reviving the fortunes of Njenga Karume empire

Tuesday August 28 2018

Njenga Karume

Njenga Karume’s daughter Jane Matu addresses the media at Jacaranda Hotel in Nairobi on August 27, 2018. She is flanked by Njenga Karume Trust chairman George Ngugi (left) and mediator Geoffrey Njenga. PHOTO | MARTIN MUKANGU | NATION MEDIA GROUP 

By BRIAN WASUNA
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By STELLA CHERONO
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Before former Cabinet minister Njenga Karume died in February 2012, he told his children to ensure they triple the size and value of his vast business empire within five years.

But what has followed since is a series of fights over control of his assets pitting some of his children and grandchildren against trustees appointed to run Mr Karume’s business empire.

Just nine months before the politician died, he formed the Njenga Karume Trust and appointed a group of close friends and confidants to run it after his demise.

Attorney General Paul Kihara, Mr George Warieri, Mr Kung’u Gatabaki and Ms Margaret Nduta Kamithi would become the trustees. But Mr Kihara resigned.

The Karume family is set to sell off some of its key assets worth millions to breathe life into businesses the former Cabinet minister left behind.

Mr Karume’s family has now opted to sell 157 acres of prime land to offset several debts and get their companies running, even as it seeks a peaceful resolution to the bruising asset control battle that spilt over to court nearly four years ago.

COMPANIES STRUGGLING

The politician had nine children but one of his sons, Joseph, died in a 2010 road crash. The Karume scions have 17 children.

Even at the time of his death, Mr Karume’s companies were struggling. Between 2008 and 2012, his nine companies only made a combined Sh5 million profit.

Plagued by insider lending, poor record keeping, reluctance to collect debts and lately fights over control of his businesses, the Karume estate has been struggling to regain its lost glory.

The family yesterday announced that all beneficiaries of the vast estate agreed to suspend court action and pursue mediation instead.

Among assets to be sold are a 140-acre parcel of land under the Kachoroba farm and Kiambu-based eatery Village Inn, which sits on five acres. Also to go are five acres of land in Elementaita and another seven in Muchatha.

The estate’s debts are estimated at Sh2.5 billion, which is owed to a number of creditors, ranging from the Kenya Revenue Authority to banks.

SELL ASSETS

The actual value of Mr Karume’s assets is not known, but his family is in the process of conducting an assessment. At one time, the estate was believed to be worth Sh100 billion, which was later scaled down to Sh40 billion.

On Monday, Mr Karume’s family said they believe the estate could be worth Sh17.5 billion, a conservative figure when compared to previous estimates.

“The mediation council wishes to confirm that it has identified and agreed on assets to be sold to enable the estate pay some urgent debts owed to Kenya Revenue Authority and other creditors.

The adverts for these assets will be published in the media soon and interested parties can bid without any fear,” mediator Rev Geoffrey Njenga said.

He will be joined by Njoki Kahiga on the mediation panel. Other stakeholders will have three representatives while two trustees will be in the panel tasked to negotiate an amicable end to the dispute.

“Lucy and Kahiu (daughter and son of Mr Karume) approached us and suggested mediation.

THREE HOLDING COMPANIES

We had a series of about 10 meetings. We never thought we would ever be able to sit in a room and talk,” Mr Karume’s fifth born daughter Jane Matu said on Monday.

An astute entrepreneur, Mr Karume consolidated his nine businesses into three holding companies.

He incorporated Jacaranda Holdings to handle his hospitality businesses, Karume Holdings for real estate and Cianda Holdings for agribusiness.

Under Jacaranda Holdings are Jacaranda Hotels in Nairobi and Mombasa, Lake Elementaita Lodge and the Village Inn.

Karume Investments operates Cianda House in the Nairobi central business district and several apartments in Nairobi, Limuru and Kiambu.

Cianda Holdings runs the Cianda and Kachoraba farms.

Mr Lee Muthoga, one of the executors of Mr Karume’s will, says the mediation council’s decisions will be final, as they have suspended the court process. “For now we are ensuring sufficient resources are found to get the companies back on their feet,” Mr Muthoga said.