Blow as Tuju loses fresh round of Sh1.5 billion loan dispute to bank

Former Cabine Secretary Rafael Tuju. [File, Standard]

Former Foreign Affairs Minister Raphael Tuju has lost a fresh bid to block East Africa Development Bank (EADB) from taking over his firm, Dari Limited, in a Sh1.5 billion loan dispute.

Mr Tuju, his three children, Dari and SAM Company moved back to the Supreme Court, seeking a review of its earlier orders that paved the way for the regional bank to place Dari under receivership to recoup the money loaned to Dari.

However, Supreme Court judges Mohamed Ibrahim, Smokin Wanjala, Njoki Ndung’u 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. This application aims 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 bank’s stake to an extent that it was impossible to reverse.

Financial distress

They argued that far from 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 Moody’s Agency Rating Report indicated that the bank had allegedly defaulted on in its payment obligations.

Tuju also lamented that EADB had allegedly used its immunity card in other cases to block the attachment of its assets.

In reply, EADB's lawyer argued the new application had neither revealed anything novel nor of public interest to invoke the Supreme Court’s powers to review its earlier orders.

The lawyer asserted that Tuju and the other five parties were simply re-seeking temporary orders to bar his client from taking over Dari after the first round failed.

The lawyer a former senior state officer also said that what Moody’s report relied on was never a part of the court record and, hence ought to have been ignored.

Dari’s worry

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.

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.

At the heart of the case is whether a United Kingdom judgment in favour of EADB can be recognised and enforced in Kenya.

Tuju is 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 plans to convince the court that EADB reneged on an agreement they made to advance Dari Sh1.19 billion.

Instead, he claims, 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 claims that the lender reneged on adding up Sh294 million for the development of 30 three-bedroomed senior resident units at Tree Lane and another 85-bedroomed maisonette at a nearby seven-acre land on Mwitu Road.

Tuju says not only did the bank refuse to advance Dari the money, but it also frustrated all his efforts to amicably bring this issue to a close.

But EADB said Tuju was offered a loan and should honour his debt obligation. 

EADB is demanding Sh1.6 billion from Tuju and his three children Yma Tuju, Alma Tuju and Mano Tuju, who are also directors at Dari. The four also personally guaranteed the loan.

Nevertheless, the former Rarieda Member of Parliament says that the UK judgment is defective and unconstitutional.

Lame verdict

While poking holes in 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.

While denying the allegations, EADB lawyers and former Uganda Solicitor General Peter Kabatsi – argued that the politician had lost the battle in the UK, first before the High Court and his appeal.

According to the trio, Tuju ought to have sought recourse in the UK and not a Kenyan court.