SECTIONS

Court clears way for sale of Ufundi Co-op Plaza

Ufundi Co-op Plaza [Photo: Courtesy]

Environment Court has paved way for the sale of one of Nairobi’s iconic buildings -Ufundi Co-op Plaza, ending an 11 years dispute between a sacco and its members.

The verdict by Justices Eric Obaga, Kossy Bor and Bernand Oboso settled a vicious battle between Ufundi Savings and Credit Co-operative Society Limited and its 14,999 members led by Bernard Ndung’u. The judges ordered that the land and the plaza co-owned by the sacco and the investing members, should be sold and the proceeds should be shared after clearing a Sh254 million debt owed to Co-operative Bank.

The sacco will get 58.88 per cent while the members will take home 49.12 per cent of the proceeds. In the meantime, the court ordered that all the rent collected from the building should be released to Co-op Bank to redeem the title used as security to the loan.

The case started at the co-operative tribunal in 2010. At that time, the 13-storrey building was worth Sh2 billion. The sacco, in an effort to wriggle itself out of a debt mess, sought to sell the building but the move was opposed by the then members, who claimed the sacco had no right to do so as it was neither the owner nor a shareholder.

The property in dispute was a replacement of the original one previously purchased by members in 1986 at a cost of Sh30 million and adjacent to the American Embassy, which collapsed during the bomb blast in August 7, 1998. In the tribunal case, the members wanted the sacco officials barred from disposing the property. At the same time, they sought for a declaration that the property belongs to 14,999 members.

The tribunal was also asked to compel Ufundi officials to furnish the members with detailed account of rent collected from the building. The epic story starts back in 1988. By then, the sacco had 30,000 members who were majorly government parastatal employees. A resolution to buy the original building as an investment venture was arrived at by 15,000 members of the sacco. They contributed Sh12 million and the sacco procured a loan of Sh18 million on their behalf from the Co-operative Bank.

Each member contributed Sh2,100 each, which was deducted from his or her savings and wages at the rate of Sh40 per month. By the end of 1989, the loan had been fully repaid through rental income from the newly-acquired building, then known as Gateway House, where the sacco was a tenant.

But even though the members had bought the building independent of the sacco, they could not register it in their name since they were not yet a separate entity. It was thus allegedly agreed that the building be registered in the name of Ufundi Co-operative Savings and Credit Society Ltd. The building as renamed Ufundi House and each of the 15,000 members were issued with a share certificate as confirmation of their shareholding investment in the building.

The court heard that on  August 7, 1998, Ufundi House collapsed as a result of a terror attack on the adjacent American Embassy.  Following the attack, United States Agency for International Development contributed Sh205 million to acquire the new building along Moi Avenue.

The split between the Sacco and the members emerged on April 29, 2010. The Sacco sought to sell the plaza. The members however resolved to de-link themselves and claimed the property.