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Uchumi Supermarket now battles Sh2 billion land claim

FINANCIAL STANDARD
By Paul Wafula | January 24th 2017
Uchumi Supermarket along Ngong Road taken on 14th July 2016. [PHOTO:WILBERFORCE OKWIRI/Standard]

A dispute over a Sh2.3 billion piece of land owned by Uchumi Supermarket could expose it to more financial difficulties.

It has emerged that the retail chain used the land as security for some of the loans it is servicing.

Through Kasarani Mall Ltd, its land-holding subsidiary, Uchumi is fighting a self-help group that had received orders restraining the retailer from the property.

The 20-acre property is next to Thika Road Mall (TRM) in Roysambu along the Thika Superhighway.

The fight for the land took a twist last week after the self-help group, Njathaini Electricity Project, was accused of trying to pass its members off as squatters.

The 40-year-old retailer argues in court papers that the self-help group misrepresented to the court that it was in active and actual control of the parcel of land.

“There are no squatters on the suit property, all that parcel of Land known as Land Reference Number 5875/2 situated in Roysambu along Thika Super Highway within the county of Nairobi, contrary to the allegations by the Applicants,” the retail chain argues in its response to the suit in which it is an interested party.

Evictions and demolitions

In December, Justice George Odunga ordered the Kasarani Officer Commanding Station to enforce the order blocking the retail chain from carrying out any evictions and demolitions on the land.

It is not clear how much exactly has been charged on the land, but Uchumi has more than Sh1 billion in loans from several lenders.

The retailer argues that this latest order is in conflict with an earlier order issued in July 2012 that had stopped the group from trespassing on the land.

“The two orders in High Court ELC Civil Suit number 495 of 2011 and the orders in this proceedings issued on 23rd December 2016 are both alive and cannot be concurrently enforceable unless so directed by this honourable court that the status quo be maintained,” Uchumi argues.

Land disputes lower the value of title deeds as a source of security, and banks often ask for other guarantees in case the title is lost to protect themselves.

The land battle does not help the fortunes of the retail chain, which is already fighting to put out several fires as it struggles to pull itself out of financial difficulties.

It has already been forced to shut down several stores, sell off some property, and look to the Government for a cash injection.

Uchumi has also been pleading with some of its largest suppliers to convert their debt into equity in a bid to make its balance sheet attractive to lenders.

Land nightmare

The retailer becomes the latest company to be embroiled in a land battle, giving corporate Kenya a taste of the nightmare that many Kenyans have to deal with.

East African Portland Cement Company, which is Kenya’s oldest cement maker, is staring at the possibility of losing a Sh40 billion parcel of land in Athi River.

The Standard unearthed how the 16,000 acres of land the cement maker acquired over eight decades ago was being subdivided by powerful groups.

Investigations revealed that about 11,980 acres – which is more than 75 per cent of the cement maker’s property – are in various stages of going into private hands.

For the retail chain, its troubles started in 2011 and have been compounded by the fact that the police have threatened to withdraw from manning the property unless the court gives them direction on which of the two orders to implement.

The retail chain wants the latest order, which granted the group a round-two victory in the land dispute, lifted.

On its part, the self-help group wants the Kasarani Police Station OCS jailed for contempt of court, arguing that officers have continued to demolish squatters’ structures on the land, despite being furnished with the court order.

Officials of the self-help group, Francis Kiarie, Francis Kinuthia and Kamiti Wanjira, are representing the group in the suit.

“The contemnors have ignored, disrespected and declined to obey the said orders made on December 23, 2016 and have in fact proceeded to demolish some of Njathaini Electricity Project’s houses in contravention of the court order,” they official say in court documents.

Njathaini Electricity Project claims in its suit that its members have occupied the disputed land since the 1970s undisturbed, hence they should be declared its legal owners.

The law allows an individual who enjoys possession of a piece of land for more than 12 years without any protest from any other person to become its legal owner.

Njathaini said despite Kasarani Mall Ltd being the legally registered owners of the 20-acre piece of land, the group’s members have not been questioned on their presence on the property for more than 30 years.

The land battle between Uchumi and the squatters is among issues raised by auditors KPMG in a probe on Uchumi’s books.

Former Uchumi auditors Ernst & Young escalated the asset’s worth from Sh450 million in 2010 to Sh2.2 billion in 2014 without consideration of crucial factors, such as the ownership row, something the retail chain’s new external auditors, KPMG, raised in an inquiry last year.

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