Development of Tatu City could stall again after another fall out between shareholders hit the Sh240 billion project.
On Friday, local partners and directors, Mr Nahashon Nyagah and Mr Vimal Bhimji, moved to the High Court claiming that their foreign counterparts, Mr Stephen Jennings and Mr Hans Jochum Horn, are frustrating the project and have failed to account for money raised since the project began.
Mr Nyagah also claims to have been kicked out as a director and chairman of the board. Mr Pius Mbugua Ngugi has been appointed in his place. Other managers of Tatu City Ltd were also appointed.
Mr Nyagah said these actions are being undertaken by the foreign investors to give them exclusive control over affairs of Tatu City Ltd and Kofinaf, a coffee firm on whose land the project sits, so that they may continue pilfering the capital and income of the company and its assets.
“There is real danger that such actions will leave the company exposed because the properties of Tatu City Ltd and Kofinaf Company Ltd would have been sold, the proceeds siphoned out of the country and beyond reach because they are not Kenyan nationals and cannot be readily available to account should the project stall or fall,” said the former Central Bank of Kenya governor.
The application was certified urgent and will be heard on February 27, 2015.
The project targets residents, companies and retailers who wish to live, work and play in “the most modern, well-planned urban development in East Africa” and is to be built on 2,400 acres.
Upon completion, it will accommodate 70,000 residents and 30,000 day visitors, according to its planners, who have primed the project as an important contribution to Kenya’s long-term development agenda, the Vision 2030.
In the court papers, Mr Nyagah said partners in the project had jointly secured a loan for purchase of Kofinaf.
“The loan was secured by a charge over the shares and properties of Tatu City Ltd through the agency of Renaissance Partners Investment Ltd, a company under the control of Mr Jennings, Mr Jochum, Mr Frances Holiday and Mr Frank Mosier,” Mr Nyagah said.
Several properties of Kofinaf Company have been sold and the proceeds allegedly used to repay the loan.
FAILED TO ACCOUNT
However, the four associates in Renaissance Partners have failed to account for the amounts repaid despite requests from Mr Nyagah and Mr Bhimji. “Mr Jennings has in breach of his fiduciary duties as a director of Tatu City Ltd and Kofinaf Company Ltd, continued to misrepresent the status of the loan and make demands on the same to justify further sale of the properties of Kofinaf Company Ltd,” said Mr Nyagah.
This is the second round of shareholders wrangling. In 2010, minority shareholders Stephen Mwagiru and Rosemary Wanja filed two winding up petitions seeking to dissolve Tatu City Company and its sister Kofinaf, alleging that the majority shareholders sidelined them from the affairs of the company.
The case delayed the project until early 2013, when Mr Justice Daniel Musinga ruled that the two were acting unreasonably by seeking to wind up the companies to force a buy-out on their terms.
The judge urged them to pursue an alternative remedy in Kenya and at the London Court of International Arbitration.