Deputy Chief Justice Philomena Mwilu does not recall formally signing security documents regarding a property at the centre of her Sh60 million battle with investigators, according to court documents.
A borrower is supposed to sign security documents to allow the lender to sell the client's property to recover the money in case of default.
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Justice Mwilu, in her court papers, claimed she negotiated to swap two pieces of land she had allegedly secured on a Sh60 million loan with another, whose title deed investigators have alleged she did not hand over.
Investigators claimed Mwilu was required to give Imperial Bank the original title for land number LR NO 3734/1129 in place of LR NO 3734/209 and LR NO 3734/202 as security, but it was not remitted by Mutunga and Company Advocates.
The State’s charge sheet before the Chief Magistrate’s Court shows that Mwilu is accused alongside lawyer Stanley Muluvi of intending to defraud Imperial Bank.
The judge also allegedly induced the bank’s receiver manager, Mohamed Mohamud, to discharge the two pieces of land to LR NO 3734/202 on the pretext that a security would be provided.
In her further affidavit, Mwilu claimed she negotiated the swapping of the security with Mr Mohamud and his successor, Peter Kariuki, on October 13, 2015. However, she did not remember when she executed the charge.
Executing a charge means signing security documents which enable a bank or a financial institution to recover its money by selling the borrower's property in the event he or she defaults in the repayment of a loan.
“I executed a charge over property Land Reference Number 3734/1129 in favour of the bank on a date I cannot recall and tasked the interested party to deal with the bank on registration,” she claimed.
Mwilu said she later met Mohamud to discuss the sale of the same land, LR No 3734/1129, to ease the loan.
The DCJ said they both signed handwritten minutes of their meeting. Mwilu, who did not disclose where they met, said Mohamud wrote the minutes.
Mwilu said she had no copy of the minutes. She said when she was interrogated on August 28, she asked the lead investigator, Abdalla Komesha, to allow her to make a copy, but he declined.
The judge said the property was transferred to her name on March 21, 2016, and she sold it on April 15, 2016.
“Mohamud Ahmed Mohamed accepted my proposal and minuted the agreement to that effect in a handwritten document signed by himself, which he kept. Pursuant to the foregoing and in terms of the handwritten document evidencing the agreement to that effect, I proceeded to sell the LR No 3734/1129 on April 15, 2016,” she claimed in papers filed before High Court Judge Chacha Mwita.
Mwilu said she sold the land for Sh150 million with the full knowledge of Mohamud.
Two months after the sale, she paid the bank Sh35 million.
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The judge said by the time she deposited Sh35 million in the bank's account, she had Sh1 million in her savings account, which was also use in to reduce her liability to Sh23 million.
But the Sh35 million allegedly did not offset the loan.
“However, the sum of Sh35 million appears to have been utilised otherwise than intended by myself and instructed to the bank, leaving a balance of what Mohamud Ahmed Mohamud claims is Sh43 million as at June 14, 2018,” she alleged.
She alleged that neither Mohamud nor the bank raised queries on how she transacted with them.
Mwilu argued that without a complaint from the two, the Directorate of Criminal Investigations (DCI), headed by George Kinoti, and the Director of Public Prosecutions, Noordin Haji, had no authority to press charges against her. In his statement with the DCI on July 6, Mohamud claimed he had established that the judge did not surrender the original title deed as agreed.
He said he went through Mwilu’s loan file after the DCI sought certified copies of files containing information on her accounts.
“It is clear from the above extract of the statement of Mohamud Ahmed Mohamud that investigations in respect to my accounts and transactions with Imperial Bank of Kenya were not initiated on the complaint of the bank. In any event, the bank has not raised any concern with me over my accounts and the transactions therein as indeed there has been no cause for such complaint,” Mwilu argued.
Mwilu’s woes with the DCI might have started on 21 May when it emerged the Kenya Revenue Authority spoken to Mr Haji about suspicious financial activities involving Rael Investments Limited and Grand Forest Japan Hospital.
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The two, it was alleged, dealt with Mwilu and Muluvi in an undisclosed sale activity.