Supreme Court Stops Auction of Raphael Tuju's Sh3.5 Billion Property

The Supreme Court has suspended the planned auction of former Cabinet Secretary Raphael Tuju’s properties over a Sh2.2 billion debt owed to East African Development Bank (EADB).

A five-judge bench of the apex court stopped the seizure of the assets by the regional bank until an appeal filed by Tuju is heard and determined.

“That this honorable court issues conservatory orders staying the execution of the following proceedings…enforcement of the notice of appointment of receivers and manager, appointing George Weru and Muniu Thoithi as receiver managers,” said the judges.

Tuju filed the appeal after the Appeals Court last week dismissed his bid to block the lender from enforcing a judgment by a UK court dated 2019.

The Court of Appeal judgment elevated the Foreign Judgments (Reciprocal Enforcement) Act, which allows the recognition of verdicts reached abroad, above Kenyan laws and the Constitution.

Tuju argues that he was not given a hearing before the UK court as required by the law, adding that the Court of Appeal ignored the defense

EADB had appointed consultancy PricewaterhouseCoopers (PwC) as receiver managers for the 20-acre property and the high-end Dari hotel, which Tuju estimated to be worth Sh3.5 billion.

The regional bank is seeking to recover the $9.3 million loaned to Tuju in July 2015, which has since accumulated to $16.5 million (Sh2.22 billion).

The loan was meant to fund the construction of cottages on 20-acre Entim Sidai land in Karen, Nairobi, and the purchase of a 94-year-old Victorian bungalow that now operates as Dari Restaurant. But the construction of the houses fell behind schedule forcing EADB to seek recovery of Tuju’s assets. 

The dispute was heard by a UK court, which ruled in favor of EADB but Tuju moved to the High Court in Kenya accusing the lender of failing to honor part of its financial pledge and frustrating his efforts to utilize the loans.

High Court Judge Wilfrida Okwany declined to quash the ruling of the UK court, prompting Tuju and his company Dari Limited to appeal against the judgement at the Appellate Court.

In his appeal, Tuju argued that EADB was frustrating the efforts of other lenders including KCB Group and equity investors to make the property profitable.

The Appeals Court noted that Tuju and EADB voluntarily chose to subject themselves to the laws of England, adding that the judgment cannot be overturned merely on the grounds that it was erroneous.

“It is therefore to be expected that before they make the choice of where their disputes will be resolved, they fully appreciate and understand the applicable law,” the judges said.