EADB faces scrutiny over operations, legal immunity

EADB operations in Kenya are governed by a special treaty framework and legal protections. [Courtesy]

For a regional lender whose operations in Kenya are governed by a special treaty framework and legal protections, the East African Development Bank (EADB) is now facing scrutiny on multiple fronts.

Parliament is questioning its regulation, immunity and dealings involving Kenyan public funds, while the courts continue to grapple with challenges to the legal framework governing its operations.

And now, the Supreme Court has revived a long-running legal battle involving former Cabinet Secretary Raphael Tuju, his family, Dari Ltd and EADB, a dispute whose value is said to be about Sh4.5 billion.

EADB is pursuing repayment of a loan it says was advanced to Dari Ltd and remains unpaid. Tuju and his companies, through a series of legal challenges, have contested aspects of the bank's actions and the handling of properties used as security for the facility.

On September 25, the Supreme Court lifted earlier recusal orders involving four of its judges, clearing the way for the judges to resume handling the case, which had been stalled for nearly two years.

The development comes as Parliament considers the East African Development Bank (Amendment) Bill, 2026 — legislation that seeks to strengthen parliamentary oversight over payments to EADB from Kenya's Consolidated Fund.

The Bill was published on June 5, 2026 and introduced in the National Assembly in July.

On August 25, senior EADB officials and National Treasury representatives appeared before the National Assembly Finance and National Planning Committee, where MPs questioned the bank's immunity, its regulatory relationship with the Central Bank of Kenya (CBK) and the returns Kenya receives from its investment in the institution.

The hearing followed a decision by the committee to summon EADB and Treasury officials to explain the bank's operations in Kenya.

Committee member David Mboni questioned why EADB was not subjected to regulation by the Central Bank of Kenya.

“The Constitution is clear that the regulatory body for banking services is the CBK, but neither the law nor the Bill addresses that aspect,” Mboni told the committee.

But EADB and Treasury offered a different explanation.

EADB Acting Director General Benard Mono and Treasury representative Jonah Orumoi told MPs that the bank operates under a different legal framework from conventional commercial banks.

“EADB is not a deposit-taking bank. It is a development finance Institution operating under the East Africa Charter and Treaty,” Orumoi told the committee.

The committee also questioned the scope of EADB's immunity, including whether its employees enjoy protection from criminal prosecution.

“Do the bank's staff enjoy immunities from criminal prosecution, and why should they enjoy this immunity?” Mboni asked.

The questions come against the backdrop of a 2025 High Court judgment that found provisions of Kenya's EADB law unconstitutional.

Justice Francis Rayola Olel ruled that provisions allowing the Treasury Cabinet Secretary to charge and issue money from the Consolidated Fund to EADB without adequate parliamentary oversight violated constitutional principles governing public finance and accountability.

The court also ordered Treasury to disclose payments made to EADB from the Consolidated Fund since 2014 and directed the Auditor-General to conduct a comprehensive audit of those funds.

For more than a decade, the dispute between EADB and Tuju has centred on a loan advanced to Dari Ltd in 2015.

EADB says the loan was defaulted on and that the debt, with accumulated interest, remains unpaid. Tuju and his companies have challenged the lender's actions and the attempts to realise properties pledged as security.

The dispute has now engulfed prime property in Karen, multiple court proceedings and attempts to sell the assets.

On August 24, Tuju's company, Dari Ltd, published a full-page “Buyer Beware” notice warning prospective purchasers against acquiring two properties that EADB has sought to sell.

Dari said the properties — including Dari Business Park on Ngong Road and the 20-acre Entim Sidai property in Karen — remain the subject of ongoing litigation.

Tuju has described the attempted sale as fraudulent and has disputed the circumstances under which his property was taken over.

“I have always wanted to pay the loan, and I have wanted to pay the loan for the longest time.” Stated Tuju.

“At one point, we offered to pay them Sh1.29 billion immediately to settle the matter and move on, but they kept moving the goalposts. They are not interested in being paid. They are interested in taking my properties in Karen ”

He also alleges that, on March 13, more than 100 police officers entered Dari Business Park in the early hours of the morning, removed his security guards and occupied the premises without a court order.

“They stormed my facility without court orders and went ahead to kick out my guards and security. They occupied my facility by force,” Tuju said.

At stake are questions about the powers enjoyed by a regional development bank operating in Kenya, the legal protections attached to those powers, the public money invested in the institution and the mechanisms available to hold it to account.

EADB was established in 1967 under the treaty of the then East African Cooperation, with Kenya, Uganda and Tanzania as its founding States. Its original mandate was to provide long-term financial and related assistance to enterprises considered capable of contributing to economic and social development across the region.

When the original East African Community collapsed in 1977, EADB survived. In 1980, Kenya, Uganda and Tanzania re-established the bank under its own Treaty and Charter, widening its mandate beyond conventional lending to include a broader range of financial, investment, advisory and consultancy services.

Today, EADB is owned by Kenya, Uganda, Tanzania and Rwanda, with its headquarters at Plot 4 Nile Avenue, Kampala and country offices in Nairobi, Kigali and Dar es Salaam. Burundi has applied to join, with its admission process still ongoing.