Tatu City runs into fresh hurdles

By Moses Michira

The ownership row at the troubled Tatu City faces a fresh twist that could further complicate matters.  This is after the petitioners seeking  dissolution of the company placed demands for an additional seven percent stake.

Fresh claims from the four-year long tussle show the stake owned by Stephen Mwagiru and his mother Rosemary Wanja is about 22 percent because they own half of the shares held by Vimal Shah’s family, a co-shareholder.

Mwagiru and Wanja, who control 15.4 percent stake, say in a petition filed in court that Shah had defaulted on a loan their family had extended to them, which was used to purchase the latter’s 14 percent stake in Tatu City.

The claim introduces a new dimension to the battle for control in the country’s largest real estate project. It further dampens investor confidence in the planned private municipality projected to create nearly 100,000 new jobs.

While the boardroom drama is largely a fight among three wealthy families and Moscow’s Renaissance Capital, the implications of the wrangles continue to dim prospects of the anticipated capital investments and  job openings.

Hundreds of buyers in the project now seem set to continue holding to bare land ownership certificates even as the crisis drags on, and the anticipated construction timelines remain suspended.

“We control a additional seven per cent shareholding in Cedar IV Ltd through a loan we provided to the Shah family for them to purchase shares in Cedar IV that they have since defaulted upon,” says Mwagiru in a petition.

Lengthy Litigation

Cedar IV is the holding company for Tatu City, which is registered in Mauritius. The country is one of the most preferred countries for businesses because it is a tax haven.

 “The Shahs are deadbeats. They have never paid a single cent for their shares, and we have stated this in several of our affidavits,” said a member of the Mwagiru family who sought anonymity. Shah, who is also the managing director of edible oils manufacturer Bidco Refineries, has denied knowledge of the claims levelled by Mwagiru, setting the stage of another round of litigation.

“That is an outrageous claim,” said Shah. “It is ridiculous that Mwagiru can say anything.”

Tatu City’s design has been modelled to be a complete municipality with residential, commercial and light industrial sections where 70000 people would call home and about 30,000 would be visiting daily either as workers or tourists.

The construction alone has been estimated to be worth a massive Sh240 billion in investments that would have a major ripple effect in the building materials manufacture and the labour market. Engineers and contractors who had been recruited to work in the laying of basic infrastructure like the road networks, sewerage and water systems were rendered jobless after the civil works were suspended last year.

A site engineer who had been hired on a three-month contract that we talked is among the professionals who are praying that the wrangles would be resolved, so enable them get back his job, hopefully on a longer contract.