Uchumi survival on knife edge as KDF occupies Kasarani land

A picture of deserted Uchumi supermarket in Kisumu in a picture taken on May 20,2018 when staff and customers fled the facility after auctioneers stormed the building to claim rent arrear the auctioneers said was totaling to sh 14 million. [Photo: Denish Ochieng/ Standard]

Land disputes in Kenya are usually settled over eternal court battles at best and machetes at worst for the valuable yet scarce commodity.

But the military introduced a new dimension last week when it marched into a piece of land claimed by Uchumi Supermarket and pitched camp, complete with building a wall.

Their claim to the 20-acre prime parcel of land located in Kasarani, near the Thika Superhighway, is based on a colonial allocation which the Kenya Defence Forces now seems to have remembered.

Letters seen exclusively by Weekend Standard indicate that the military may even have earlier abandoned claim to the piece of land due to its location, which is within land earmarked for residential properties.

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The Kenya Defence Forces had an opportunity to take the land in 1987 but turned down the offer.

Now the military want to cure allocation of the land to Solio Construction Company, asking Uchumi to carry the burden of proof for buying the land.

This is despite the fact that the Attorney General pronounced himself on the matter, stating that the Government had no legal basis to challenge Uchumi’s title deed.

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“There is no evidence suggesting any collusion or complacency between the company and the land officials during allocation to Solio Construction,” then Director of Public Prosecution Keriako Tobiko, said in a 2008 letter.

According to sources familiar with the dispute, the land was set aside for the military in the colonial times.

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It was however leased to an Israeli man, Jacob Samuel, who held its lease until his death but his family was unable to renew the lease.

Around 1987, the Government contemplated letting the military take up the land. This however proved problematic since the land was small and surrounded by parcels that were earmarked for residential areas.

The military was advised to buy three adjacent properties to make the location viable or it would ‘be surrounded by villages’, a letter seen by Weekend Standard read.

In April 1987, the military chief of staff wrote to the Government calling for shelving of the plans.

Uchumi bought the land in 2001 from Solio construction for Sh85 million and 18 years later wanted to sell it for Sh2.8 billion to Jewel Complex Limited.

But KDF wants Uchumi to provide evidence beyond reasonable doubt that they legally acquired the land.

KDF Spokesperson Colonel Paul Njuguna said that Uchumi should use internal channels despite the fact that the retailer claims it has written to the Defence ministry to intercede in the matter.

“The matters you bring forth concerning KDF camp at Roysambu should be raised in a formal claim. The camp is on Ministry of Defence land. In case there is a claim, as you indicate, it should be made formally as required,” said Colonel Njuguna.

The dispute comes up just at the time when Uchumi is set to meet its creditors to make a last stand at survival.

Uchumi, which barely survived a winding up suit on Friday, has previously been kicked out of its headquarters and some of its branches.

In tomorrow’s meeting with creditors, Uchumi Supermarkets hopes to convince them to take a 70 per cent cut on their debt as the windfall of the sale of Kasarani land looms.

“If we go the Nakumatt way no one will benefit as the creditors and suppliers will lose. We hope that by giving us a chance we can turn around the company and pay back our debts,” said Uchumi Chief Executive Mohamed Mohamed.

Recovery plan

Uchumi, whose stock touched an all-time low of 29 cents at the Nairobi Securities Exchange on Friday, will need a miracle to recover.

The Kasarani land deal is central to the recovery plan since the troubled retailer has entered into an agreement with Jewel Complex to sell the land and that a Sh330 million deposit has already been paid, which has excited creditors of the struggling retailer.

Once the money lands in the retailers’ accounts, Uchumi wants the creditors to agree to write-off parts of the debts and interest to allow it fund its recovery plan.

“These assets will be the main source of funding required to settle the company’s liabilities. However, since the amount owed by the company is higher than the expected proceeds, a debt restructuring is necessary which will entail negotiating for interest waivers, extension on the Government loan moratorium and haircut,” said Uchumi’s court-appointed interim advisor, Owen Koimburi, in court filings.

Uchumi finally wants to audit its Sh3.6 billion supplier debt with hope that the mountain of credit will reduce.

“The provisional supervisor is aware that some of the payables due to the vendors and suppliers require to be verified and reconciled,” said Mr Koimburi.

“It is believed that the verification exercise will result in reductions of the amounts owed thereby paving way for negotiations to obtain a 70 per cent discount on the final agreed payable amount.”

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Land disputesKenya Defence ForcesUchumiKasarani land