Deal gone bad: Inside Raphael Tuju-EADB's Sh1.9b loan fallout

Former Cabinet Secretary Raphael Tuju at his Entim Sidai residence in Karen Nairobi. [File, Standard] To former Foreign Affairs minister Raphael Tuju, the move by the East Africa Development Bank (EADB), and the years he has been in court, fighting to salvage his prime properties in Karen, Nairobi, have been a source of unending anguish. From his own mouth, the Judiciary has denied him a voice, with the Supreme Court declining to hear his case, and the lower court granted his rival a chance to get a pound of flesh, close to his heart, blocked his path to an appeal, and it reeks of corruption. He said on Wednesday night that a former judge and a lawyer were allegedly nabbed while seeking a kickback to implore a judge to allow him to move to the Court of Appeal. He further said Entim Sidai Wellness Sanctuary, Tamarind Karen and Dari Business Park will only get a new owner over his dead body. "They have to kill me and bury me in Rarieda," he said. Nevertheless, EADB, the orders issued by Commercial Court judge Wayua Mong'are, striking out the case that had blocked it from auctioning Entim Sidai and transferring Dari Business Park to a new owner, was the end of the road for a debtor who had failed to honour his end of the bargain. EADB argued that he knew he ought to have honoured his end of the bargain. The battle between Tuju and EADB has been nothing but rounds of legal thrill and a seat-edge watch drama that gets more intriguing. Tuju tried to overturn the United Kingdom judgment that paved the way for the bank to come after him, fought off an auction of the properties, sought the removal of Supreme Court judges after they shut him out for filing a petition for their removal before the Judicial Service Commission (JSC). He also lodged a criminal complaint against EADB senior officials and defended a bankruptcy case filed by EADB, and even moved to the East Africa Court of Justice. On the other hand, EADB went after his rent, sought to have Tuju and his three children, Mano, Alma and Yma, jailed or fined for contempt of court and filed a case to declare them bankrupt. At the heart of the case is Sh 1.9 billion. Tuju's company, Dari Ltd, entered into an agreement with the bank on April 10, 2015, under which it agreed to give Dari a Sh943.9 million ($9.3 million) loan. The loan was for the acquisition of a 22-acre forested land dubbed Entim Sidai in Karen and purchase of a 94-year-old bungalow built by a Scottish missionary, Dr Albert Patterson, which operated a high-end restaurant and 14 rooms. Part of the loan was meant to help in the construction of 12 luxury two-storey bungalow homes at Sh100 million each, worth Sh1.2 billion, sitting on part of the sprawling, serene land in Karen. It would have made him richer by Sh 2.4 billion. Tuju claimed that he was approached by then chief executive officer of the bank, Vivian Apopo, who said they were willing to support him in buying the prime land. This was when things were still good. When the battle started, they went before the UK High Court judge, Daniel Toledano. Tuju accused the EADB of reneging on the release of Sh294 million to build the luxury homes for sale, which he said was meant to help repay the money. However, the development of the luxury homes fell behind schedule, and Tuju's company defaulted on repayments, setting the stage for asset seizures. Toledano dismissed Tuju's case and found he had no arguable defence. He further said the bank was under no obligation to lend the additional Sh294 million. '"It is true that a further facility was proposed and discussed, but it never reached the stage of being agreed and implemented. No facility agreement was concluded and no other contractual obligation to lend this amount was agreed according to the material before the court," he said. He appealed in the UK, again, this was also dismissed. EADB then moved to have the judgment recognised in Kenya. Tuju in all courts in Kenya and also in the East African Court of Justice, claimed that EADB was fully aware that in the absence of the development of the housing units for sale as envisaged in the project proposal and that Dari Ltd would not be able to service the loan facility. He also accused the EADB of stopping KCB Group from taking over the loan and derailing equity investments in the deal by Dubai investors. "The investors were ready to pay EADB Sh1 billion and inject a further billions into the two projects at Dari Business Park and Entim Sidai but the EADB refused," Tuju argued. Tuju argued 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. It asserted that to date, it has not gained access to the charged property and could not ascertain how much it is worth. The lender 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. Tuju also questioned the UK judge and EADB's lawyer's conduct. He claimed he was not given a chance to argue his case and was not allowed to question witnesses who had been fronted by the bank. He equated the judgment delivered on June 19, 2019 to re-colonising the country adding that Justice Toledano and EADB's lawyer in the UK, Michael Sullivan, shared chambers, hence there was outright bias. While denying the allegations, EADB lawyers Githu Muigai, Sullivan 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 them, Tuju ought to have sought a recourse in the UK and not a Kenyan court. EADB lawyers said he had not made any payments or shown commitment to offset the loan. According to Githu, the UK court judgment meets the constitutional threshold for it to be enforced in Kenya as Tuju participated in the UK case, and was allowed to even fight on appeal. The former Attorney-General also argued that Tuju was trying to re-open the case afresh in Kenya, in a bid to deny his client an opportunity to recover its money. On the EABD's lawyer and the judge sharing a chamber, Githu distinguished that the practice in UK is different from Kenya. He explained that in UK, there two types of lawyers - barristers and solicitors. Githu said that solicitors own law firms while barristers are lone lawyers who share a building, but have different chambers, clients and practice separately. According to Githu, Toredano and Sullivan are barristers hence could not meet or interact as they have separate chambers. Githu argued there was no evidence to show collusion or even meeting between the judge and the bank's lawyer prior and during the hearing of the case. In January 7, 2020, the High Court in Nairobi accepted the judgment issued by the UK court, setting ground for the insolvency proceedings. In her ruling, Justice Wilfrida Okwany said EADB had satisfied the conditions for the judgment to be enforced in Kenya; the bank had proved that it obtained a summary judgment against Dari Ltd, Tuju and four others in April 2019 and an appeal filed by Tuju's company subsequently dismissed. Tuju did not give up, he moved to the Court of Appeal. Justices Kathurima M'inoti, Imaana Laibuta and Mwaniki Gachoka's dismissed his appeal case, which prompted him to escalate it to the Supreme Court. At the apex court, the peak of the battle ended with judges Philomena Mwilu (Deputy Chief Justice), Mohamed Ibrahim, Smokin Wanjala, Njoki Ndung'u, and William Ouko ruled that they could not sit to hear the case as Tuju, Dari Ltd, Mano, Alma and Yma Tuju, had filed petitions to remove them from office. In the meantime, he went back to the commercial court, seeking to reopen the case. He argued that EADB's senior manager, David Washington Barnabas Ochieng Odongo, had admitted that the lender disbursed only Sh240 million, which was allegedly less the amount that had been originally agreed upon. At the same time, he said that Odongo had recanted key parts of his earlier statement against Dari Ltd and revealed that the regional bank did not disburse the second loan for completion of the project, which would have enabled him repay the loan. Nevertheless, Justice Wayua Mong'are said that the issue of the judgment had been resolved by another judge. She said that Odongo's new evidence did not pass the test for the court to reopen the issue. Unrelenting, Tuju again filed another application against EADB, Garam Auctioneers, Ultra Eureka Ltd, the Land Registrar and the Attorney General, challenging auction. He claimed that the auction violated court orders barring EADB from selling the high-end property to recover the contested loan. The former Jubilee Party Secretary-General filed two separate cases against the registrar. In the first, he sued the Chief Land Registrar of Nairobi and the Ministry of Lands Cabinet Secretary. According to Tuju, Justice Mong'are had issued orders barring Garam, Knight Frank Valuers and the regional bank disposing the property dubbed Entim Sidai Wellness Sanctuary and Tamarind Karen and Dari Business Park. He asserted that the orders were extended on October 20, 2024 and subsequently February 6, 2025. Tuju stated that the order bring transfer was booked for registration on November 29, 2024. According to him, the title at the time had not been converted to a new register. In response, EADB accused Tuju of re-opening the debt issue afresh despite the same being dismissed earlier. Justice Mong'are agreed with the bank, and struck out the case on Tuesday this week. Tuju has since moved back to the same court, and has been allowed to appeal part of the verdict. The case will be mentioned on March 17, 2026.

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