Will and trust designed to benefit future generation Karumes

Jacaranda Indian Ocean Beach Resort in Diani, Kwale County.

Billionaire Njenga Karume appears to have designed both his will and declaration of trust to the full benefit and enjoyment of future generations of his family.

A careful study of the will and the trust, both now part of court exhibits in ongoing multiple suits, reveal the man had set his sights further down the family tree.

Private interviews with Karume’s confidantes also confirmed the billionaire had wanted his fortunes to grow five-fold over the period it was under trustees.

In the will dated June 6, 2011, Karume, who died in 2012, left a substantial chunk of his fortune under the care of Njenga Karume Trust, after distributing the rest to his living beneficiaries through his estate.

The executors of his estate are Dr Francisca Wanjiku (his eldest daughter), Dr Stephen Karau (a friend of the Karumes) and James Raymond Njenga (Karume’s cousin).

The trust is chaired by George Ngugi Waireri and its membership comprises Kung’u Gatabaki, Henry Waireri Karume (Karume’s son) and Margaret Kamithi (Karume’s sister).

The substantial chunk valued in terms of billions and left under the trust was described in the will as “residue of my estate”.

In reality, however, the trust fortunes are not “residue” but the core of his wealth. They were only referred to as such because in legal terms, the trust was born off the will and is technically off the estate.

“He was a very clever man who knew what he wanted and meticulously pursued it. He was very clear in his mind about what he was up to and what he hoped to achieve with it. You can see through it in the trust and will documents,” a confidante, who flatly refused to be quoted on record, told The Standard on Sunday.

In his will, Karume transferred almost all shares of his major business interests to three holding companies, which were all placed under the trust. The three holding companies are Jacaranda Holdings Limited (JHL), Karume Holdings Limited (KHL) and Cianda Holdings Limited (CHL).

JHL got 4,999 of the 5,000 shares Karume held in Jacarada Hotel Limited, which owns Jacaranda Hotel in Westlands and Pizza Garden Restaurant, also in Westlands. He left out only one share, which he bequeathed his youngest son Emmanuel.

JHL also got all Karume’s shares in Jacaranda Hotel (which owns Indian Ocean Beach Club), all shares in Jacaranda Hotels Kenya Limited (owns land in Mombasa), all shares in Lake Elementaita Lodge Limited, all shares in Village Inn, all shares in Kentmere Club Limited and all rights in Highland Hotel in Molo. Essentially, JHL took over all hotel businesses of the late Karume.

KHL on the other hand got 49,999 shares of the 50,000 shares Karume owned in Karume Investments Limited. The company owns, among others, Amani House in Westlands and Unity House in the city centre.

Karume left out one share, which he again bequeathed Emmanuel. In addition, KHL received all Karume’s shares in Contractors and Harvesters Limited, all shares in Gracia Limited, one share in Kabete Distributors and one share in Forest Road Flats Limited.

The third holding company, CHL, got 4,999 shares Karume owned in Cianda Estates Limited, which owns the expansive 500-acre Cianda farm. Karume left out one share, which he once again, donated to his youngest son Emmanuel.

In addition, CHL got all Karume’s shares in Kacharoba Limited and all shares of a company that was to be exclusively incorporated between him and his wife, and which was to own Lynton Farm, Kamiti Tea Farm and land in Laikipia/Nyahururu, where Karume’s parents are buried.

In contrast Karume left to his immediate family shares from smaller companies and smaller properties. His wife Grace Njoki got all shares in Kigutha Farmers Limited, surplus of cash held in Karume’s personal account and all shares in companies listed on any recognised stock exchange.

Emmanuel, who appears to have benefited the most, took all shares in Kiambu General Transport Agency Limited, all shares in Majoreni Agencies, all shares in Ngorongo Tea Factory Limited, 25 per cent stake in Heri Limited, 12.5 per cent in Kenya Wine Agencies and joint tenancy of 60 acres of Cianda Farm.

In addition, Emmanuel, now 6, received the only share Karume had retained for himself in almost all major Karume businesses – Jacaranda Hotel Limited, Karume Investment Limited, Kabete Distributors Limited, Cianda Estates Limited and Forest Road Flats.

His son Samuel Wanjema Karume got 25 per cent of Heri Limited, 12.5 per cent in Kenya Wine Agencies, 16 acres hived off the 508-acre Cianda Farm together with the farm house which he occupies and the only share Karume had in CHL.

Henry Waireri Karume, another son got 25 per cent of Heri, 12.5 per cent of Kenya Wine Agencies, Karume’s only share in KHL and eight acres of Lynton Farm together with the “Lynton House” located in the farm.

His son, Albert Kigera Karume got all Karume’s shares in Pelican Insurance Brokers Limited, 25 per cent of Heri, 12.5 per cent of Kenya Wine Agencies, eight acres of Lynton farm and Karume’s only share in JHL.

Daughter Francisca Wanjiku got Sh10 million in cash, 12.5 per cent of Karume’s shares in Kenya Wine Agencies and 25 per cent of shares in Paper House Kenya Limited.

Another daughter Theresia Njeri got Sh2 million in cash, 12.5 per cent of Kenya Wine Agencies, 25 per cent of Paper House of Kenya Limited and five acres of Lynton Farm. In addition, her son Morris, a grandson of Karume, got 1.3 acres of Lynton Farm.

Jane Mukuhi, the other daughter got an apartment “of value not exceeding Sh15 million”, all Karume’s shares in Bata Shoe Company, 12.5 per cent of Kenya Wine Agencies and 25 per cent of Paper House of Kenya.

The last daughter, Lucy Wanjiru got 25 per cent of Karume’s shareholding in the Paper House of Kenya Limited, 12.5 per cent of Kenya Wine Agencies Limited and five acres of Lynton Farm.

Albert, Samuel and Lucy are the ones leading a court bid to kick out the trust from running the businesses. In his trust declaration drawn out by Iseme, Kamau & Maema Advocates, Karume expanded the scope of beneficiaries of the wealth he left with the trust. His children and wife are just two of the ten beneficiaries he listed.

Other beneficiaries listed are Karume himself, his grandchildren, his great grandchildren, “any trust or corporate entity created primarily for the benefit of any or all” of his listed kin, “any persons appointed by the trustees as beneficiaries” and finally the three holding companies, JHL, CHL and KHL.

As for the rest of the annual income, Karume decreed several options as to how it may be used. He says it may be applied to the maintenance, education and advancement in life of his wife, children, grandchildren and great-grandchildren.

It may also be re-invested in JHL, KHL or CHL or retained in the trust to be held as undistributed income or awarded to any of the beneficiaries on terms to be determined by the trust. They could also be added to the capital of the trust.

Karume also appeared to anticipate the present squabbles by granting the trust “an absolute and unchallengeable discretion” in regard to the allocation of income. He also decreed that the trust “shall be under no obligation to benefit any of the beneficiaries at all or to maintain any parity, proportion or balance between the groups of beneficiaries.”

To further silence the beneficiaries, Karume included a clause in the trust declaration in which he avowed that the trust will have absolute and unchallengeable discretion to exclude any beneficiary whom they determine to be “disruptive of the affairs of the trust” or who is “wasteful of the trust fund”.

He also indemnified the trustees and gave them finality of decision making over the beneficiaries. All disputes, according to the trust declaration by Karume, should be referred to IKM Advocates and preference given to lawyer James Kamau.

Further, Karume gave the trustees exclusive powers to amend his trust declaration through unanimous agreement “if in their discretion they deem such variation to be in pursuance of the broad intent” he had when constituting the trust. To ward off opportunists who may con their way into enjoyment of his riches, Karume’s last decree in his declaration said beneficiaries of the wealth generated by the trust shall enjoy the benefits in their individual capacities even where they are married.

“Notwithstanding that such marriage may be in community of property, the capital and income devolving upon the beneficiary in terms hereof and the fruits thereof shall remain his or her own free, unencumbered and separate property, and shall not fall into joint estate,” Clause 20.1 reads.

Put differently, Karume excluded spouses of his beneficiaries from lodging any claims to his sweat. He further forbade settling of debts or engagements of beneficiaries spouses with fruits of his trust.