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Eliud Mahihu: Powerful Coast PC who used the beach and connections to mint millions

Sunday October 11 2015

The late Eliud Mahihu. Mahihu, as Coast Provincial Commissioner, took on those who dared interfere with his investments — or those of his expatriate friends. FILE PHOTO | NATION MEDIA GROUP

The late Eliud Mahihu. Mahihu, as Coast Provincial Commissioner, took on those who dared interfere with his investments — or those of his expatriate friends. FILE PHOTO | NATION MEDIA GROUP 

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Some years back, I sat at the Norfolk Hotel for an interview with Mr Eliud Mahihu, a man who had choreographed the handover of power to Daniel arap Moi in 1978, following the death of Mzee Jomo Kenyatta.

By then, he was the chairman of the Kenya Tourism Board, a body that was supposed to market the country as a tourist destination. That was before he was succeeded by Uhuru Kenyatta on July 28, 1999.

Mahihu, like many politicos do, had dyed his receding hair black, was in a crisp white suit – but still looked like a grand-dad.

It was an early morning meeting. We ordered some breakfast and the discussion centred on Kenya’s tourism sector and how it was now in the hands of indigenous Kenyans and how it had grown over the years.

He also talked about his personal contribution and his investments in the sector.

Facts were scanty, twisted, or both. Politics of selective remembering was at play. Mahihu had a penchant for secrecy.


A few weeks ago, I came across some documents that now confirm the story of how Mahihu would throw his weight on anyone who dared to challenge him.


They illustrate how Mahihu, as Coast Provincial Commissioner, took on those who dared interfere with his investments — or those of his expatriate friends.

The story about the wars between Mahihu and the Director of Kenyanisation of Personnel Bureau at the Ministry of Labour, James Waibochi, has for years been hidden in some Mahihu documents. (Not any more).

After independence, all establishments were by law supposed to Kenyanise their senior positions or submit a plan on how they hoped to employ locals. But not Mahihu and his expatriate friends.

The story starts on April 20, 1967 in Nicosia, Cyprus, after a chartered Swiss passenger plane crashed killing 126 passengers.

The Swiss charter company, Globe Air, was owned by arts billionaire Peter G. Staechilin and his partner Karl Jacob Ruedin.

Peter was the son of Rudolf Staechelin, a billionaire arts collector who had taken advantage of the First World War to purchase some masterpieces.

Upon his death in 1946 he entrusted his collection worth millions of dollars to the Basel fine arts museum.

To offset some debts following the Nicosia crash, and facing possible bankruptcy, Peter sold some of his family’s Van Gogh art collections to support the company.


The cause of the Nicosia accident, according to German papers, was Ruedin’s management style.

He was forced out of the company after authorities refused to allow Globe Air flights to leave Bonn and Bern unless he quit as director.

He did and left for Mombasa, a town where he had flown charter flights. It was also far from the troubles in Bonn and Bern.

It was here, with the fortune that he had made from Staechilin, that he met Mahihu — the man who had the authority to identify those who could get beach plots.

Ruedin had the capital, lots of it, and Mahihu had the power and that is how African Safari Club was born in 1967.

They started off with Watamu Beach Hotel near Malindi, then Hotel Malaika and by 1976, when the battles with Mr Waibochi began, they had taken over the management of 10 hotels and set up an airline – African Safari Airways.

Reudin was abrasive. Two days before Christmas in 1976, he wrote a letter to Mr Waibochi asking for a “permanent quota of entry permits” to the African Safari Club.

A section of cottages at the now closed and
A section of cottages at the now closed and abandoned Watamu Beach Hotel. They started off with Watamu Beach Hotel near Malindi. PHOTO | ROBERT NYAGAH | NATION MEDIA GROUP


He said they required expatriate personnel who could speak German, French, English and Italian. He thus wanted a permits quota of 56 people.

He copied his letter to Yuda Komora, then Permanent Secretary for Tourism, Jonathan Njenga, Principal Immigration Officer, and Mr Mahihu. And that is where trouble started.

Mr Mahihu was out of office. But still he dictated a letter, stamped confidential, to Komora, Njenga and Waibochi, asking them to attend a meeting at Waibochi’s office to discuss Mr Ruedin’s “self-explanatory” letter and “alleviate future problems that affect this major tourist company”.

Mahihu did not disclose his interests and after the meeting between Reudin and Immigration chief Njenga, no agreement was reached.

Mr Waibochi had insisted on a training programme.

Mr Mahihu, according to his letters, decided to play power-games and called then Vice-President Moi and they started by-passing Mr Waibochi’s office.

Then Kenyatta died in August 1978 and Moi, who had helped Reudin get the permits, had become the President, thanks to Mr Mahihu and his inner circle of friends.

In May 1979, Mr Waibochi – perhaps aware that Mr Ruedin had managed to have his way – decided to write to him.

After reminding him that he had not submitted his Kenyanisation training programme despite reminders since 1976 and neither had he filled immigration forms demanded, he warned: “Unless you submit the necessary information and discuss a Kenyanisation programme with us immediately, no more work permits will be issued to you, and you may even lose some that you have just renewed.”

Had Mr Waibochi punched above his weight? Certainly.

Ruedin did not reply to this letter and instead it is Mr Mahihu who wrote back, copying his letter to Mr Charles Njonjo, then Attorney-General, and Mr Geoffrey Kariithi, the PS Office of the President.

In the letter, Mr Mahihu accused Mr Waibochi of having ill-intentions against African Safari Club: “You wanted to get rid of those managers with work permits.”

He then reveals in the letter that Ruedin had decided to approach Mr Moi who, according to Mr Mahihu, “approved a block of work permits … if you are not aware that the Hon Vice-President had approved the application of African Safari Club, it is better you ask Mr J. Mutua, the Principal Immigration Officer, who I am sure will be pleased to advise you.”

Then he touched Mr Waibochi’s raw nerve: “It is not easy to find an African manager at least who can manage tourist hotels like Outspan in Nyeri …”

Mr Waibochi, a shareholder in Outspan, protested in his curt reply: “I object to your reference to Outspan Hotel as personal interests do not influence execution of my official duty.”

He told Mr Mahihu that Outspan is 100 per cent Kenyanised and decided to put the record straight “to those dignatories (sic) you have copied your letter to.”

He told Mr Njonjo and Mr Kariithi that the Bureau did not accept Mr Ruedin’s argument that they still needed expatriates.

“To our surprise, instead of sending the proposals to us, the company representatives went to the then Vice-President and they were allowed to renew work permits for 40 expatriates,” said Waibochi who decided to take on Mr Mahihu: “I abhor undue interference with my work from interested and influential civil servants.”

In his next volley, Mr Mahihu told Mr Waibochi that “it requires little intelligence to discover that a number of very highly placed personalities in the country would be happy to see African Safari Club close their operations in this country.”

Then Mr Mahihu went biblical: “Behold, I am laying in Zion a stone, a chief corner stone, elect, precious: and he that believeth in him shall not be confounded. Unto you therefore which believe he is precious: but unto them which be disobedient, the stone which the builders disallowed, the same is made the head of the corner.”

It was a warning to Mr Waibochi to either allow Ruedin to have his way or give way.

“We have in the past lost skilled persons such as technicians, watch repairers, mechanics on the exercise of work permits and these have not yet been replaced,” complained Mr Mahihu.

The tone surprised everyone.

“I am extremely concerned about the tone and content of the correspondence,” wrote J.I. Othieno, the PS ministry for Labour in his July 14, letter to Mr Kariithi.

“I do not approve of the emotional and rather personalised reaction of Mr Waibochi ... but at the same time I disagree with Mr Mahihu that Kenyanisation policy should be watered down ... Mr Mahihu’s letters worry me because he states that he has in the past successfully by-passed the Kenyanisation of Personnel Bureau and dealt directly with the Immigration Department on work permit matters, and that he intends to continue doing so ... We cannot be party to Mahihu’s biblical quotation whose relevance I must admit I do not understand.”

Mr Othieno wanted Mr Kariithi to clarify the government policy on the matter. There are no records whether he did it.

But that is how Ruedin and Mr Mahihu managed to terrify government bureaucrats. The two became immensely rich with Ruedin managing a vast empire that included upmarket beach hotels and three cruise ships in Egypt.

With the death of Mr Mahihu in 2008, collapse of tourism, and loss of political power, Ruedin’s empire collapsed.

His UK-based African Safari Club closed on March 16, 2011 and liquidated three months later.

Several fires broke in Ruedin’s hotels (blamed on arson) as former workers of the closed African Safari Club Beach Resort camped at his gate demanding Sh295 million in outstanding salaries and terminal dues.

The Arab Spring brought Egyptian tourism to a halt. By the time he died in 2013, Ruedin’s might in the tourism industry had waned.