Intrigues in Tuju's battle to save company from bank takeover

Former Foreign Affairs Minister Raphael Tuju and East African Development Bank (EADB) have been in court over Sh1.5 billion loan. The Sh1.5 billion loan battle between former foreign affairs minister Raphael Tuju and East African Development Bank (EADB) has been among the major commercial battles in courts this year. With Justice Afred Mabeya setting March 7, 2024 as the hearing date for Mr Tuju's fresh bid to salvage his company, Dari Ltd, from takeover by EADB, the dispute that started in England is set to give another legal round of thrill. It is the second time that Tuju, his three children Mano, Alma and Yma and the company Dari are before the commercial court. This time, they asked the court to facilitate a mediation process where they will pay back the loan. Tuju, Mano, Alma and Yma are directors at the company. The first time they were before court, the issue was whether a judgement in the UK in favour of EABD could be implemented in Kenya. The Tujus lost to EADB before the Commercial Court and the Court of Appeal, while the Supreme Court declined to suspend the receivership process. However, the highest court in the land is yet to hear and determine whether the lower courts erred by finding that the UK judgment is enforceable in Kenya. Last week at the Commercial Court, Dari directors said they had secured a deal with an international firm that will buy out the loan and ultimately end the case. They stated that their interest was to only have a tabulation on the interest owed on the principal amount before settling. "The applicants are desirous, ready and willing to pay the amount due under the facility agreement," said Tuju. "It is the applicants' sincere belief that Court Annexed Mediation is the best way, in the totality of the circumstances of this case, to have this matter resolved expeditiously by agreeing on the amount payable." Loan in dispute Tuju has been fighting to block receiver managers from his Dari Coffee Garden and Restaurant (which took the loan) while also shaking off a bankruptcy suit brought against him and his three children. He planned to convince the court that EADB reneged on an agreement they made to advance Dari a total of Sh1.19 billion. Instead, he claimed the lender only advanced him around Sh800 million for the acquisition of the 20-acre Tree Lane property to expand his hospitality business at Dari in Karen Estate, Nairobi. Further, he claimed that the lender reneged on additional Sh294 million for the development of 30 three-bedroom resident units at Tree Lane and another maisonette at a nearby seven-acre land on Mwitu Road. Tuju said not only did the bank refuse to advance Dari the money, but it also frustrated all his efforts to amicably bring the issue to a close. But EADB said Tuju was offered a loan and should honour his debt obligation. The bank is demanding Sh1.5 billion - including the principal amount and accrued interest - from Tuju and his three children. The four personally guaranteed the loan. The court heard that EADB was holding Sh4.2 billion worth of security. However, EADB in its response said it does not need the court's intervention or mediation for payment, as the borrowers are already in default and the Supreme Court declined to stop the receivership process. It asserted that to date, it has not gained access to the charged property and could not ascertain how much it is worth. It accused Dari, the former minister and his children of barring receiver managers from accessing the property. The regional lender also argued that it is yet to receive any offer from any firm or bank willing to take over the loan. "It must be with 'tongue in the cheek' when the applicant on one hand clearly admits having taken monies from the first respondent, not having paid the respondent any monies since 2016, and now seeks, on the other hand, albeit belatedly, the court's intervention to purportedly engage in determining the amount payable to the facility agreement," argued EADB. Justice Mabeya ordered for status quo until the new duel is heard and determined. As things stand, the Supreme Court rejected the Tujus' plea to stop receivership. The Tujus had filed first two applications at the Supreme Court. The first was to halt the implementation of the Court of Appeal orders, which was rejected. They again filed a second one seeking a review of the initial Supreme Court orders that paved way for the regional bank to place Dari under receivership to recoup the loan. However, Supreme Court Judges Mohamed Ibrahim, Smokin Wanjala, Njoki Ndung'u, Philomena Mwilu and William Ouko unanimously ruled there was nothing exceptional in the new application that would warrant them to intervene. The five judges dismissed the application and ordered the six to shoulder the cost. "We have no hesitation in declaring that, as framed, the application falls short of the exceptional circumstances, and we decline the invitation to exercise the court's limited discretion to review the ruling. "The aim of this application is to avail the applicant a second bite at the cherry. For these reasons, the application lacks substance and is disallowed," the bench headed by Justice Ibrahim ruled. In the application, Tuju's lawyers led by Senior Counsel Paul Muite argued that the initial court's ruling had raised the bank's stake to an extent that it was impossible to reverse. They argued that far from the court's finding that EADB would be able to pay the amount if the case succeeded, the lender was allegedly in financial distress. The court also heard that a report by global ratings firm Moody's indicated that the bank had allegedly defaulted on in its payment obligations. Tuju also claimed that EADB had used its immunity card in other cases to block attachment of its assets. According to the bench, Dari's worry that the bank would ride on its diplomatic immunity not to honour the orders in case of a win could not be founded. In reply, EADB lawyer Githu Muigai argued the new application had not revealed anything novel or of public interest to invoke the Supreme Court's powers to review its earlier orders. He said Tuju and the other parties were simply re-seeking temporary orders to bar his client from taking over Dari after the first round failed. The former Attorney General also said that the Moody's report relied on was never a part of the court record, hence ought to have been ignored. Competing interest On October 6 this year, the court found that that a balance of competing interest between EADB and Dari tilted in favour of the regional bank as Tuju's firm still owed it Sh1.5 billion. "We are satisfied that the respondent remains a reputable international bank that should have no difficulty compensating the applicants if the applicants succeed in their claim. "The applicants' apprehension as to the diplomatic immunity afforded to the respondent does not suffice," the Supreme Court ruled. In his case, the former Rarieda MP said the UK judgment is defective and unconstitutional. While opposing the judgment, he argued that the verdict cannot stand as Justice Daniel Toledano and EADB's lawyer Michael Sullivan are both members of One Essex Court Chambers, a commercial law firm in the UK. Tuju faulted the Commercial Court for allowing EADB to enforce the judgment, saying Justice Wilfrida Okwany failed to consider his grievance on how the proceedings in the UK were conducted.

Intrigues in Tuju's battle to save company from bank takeover

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS

Similar Articles

Betting sector takes action to curb addiction with new rules

Sh100m Bamburi Cement plant to ease construction

Dar es Salaam-bound flight diverts to JKIA due to medical emergency

New sales training initiative launched in Nairobi to address skills gap

DIGGER JOBS

Digger Motors

Digger Real Estate

Intrigues in Tuju's battle to save company from bank takeover

Facts First

This story continues on The Standard INSiDER. Subscribe now for unfiltered journalism that holds power to account.

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS