An auctioneer has put up for sale a prime hotel belonging to former Cabinet Secretary Raphael Tuju, one week after he lost an application to stop the forced sale to recover a debt of Sh4.5 billion owed to a regional bank.
Garam Investments Auctioneers on Monday invited bids for a buyer of Exotic Entim Sidai Wellness Sanctuary in Karen.
This is the second time the auctioneer is advertising the property for sale, following an earlier one that scheduled the auction for October 1, but the former CS moved to court in a bid to stop the auctioneer and East African Development Bank from conducting the sale.
In the earlier advertisement, the auctioneer had advertised for sale Entim Sidai alongside Tamarind Karen and Dari Business Park but it is not clear why the latter property has not been listed for sale.
“All intending purchasers are requested to view the property and verify the details as they are not warranted by the auctioneers,” the notice read.
The notice comes one week after the high court dismissed Mr Tuju’s application to stop the auction.
Mr Tuju moved to court arguing that he has never been served with a statutory notice under section 90 of the Land Act.
He further submitted that the lender is seeking to recover $35,051,622 (about Sh4.5 billion), an amount that has exceeded the principal amount, on account of interest.
Mr Tuju further submitted that the auctioneer issued the notifications advertising for the sale of the property, unlawfully and that there were several cases pending determination in various courts.
The bank opposed the case stating that Mr Tuju had admitted the debt and had unsuccessfully pleaded with the court for the matter to be resolved through mediation on the mode of payment.
The lender said that property management firm Knight Frank valued the properties on July 15 and that several statutory notices had been issued, the first having been issued between December 2019 and July 2021 and another notification was issued on July 25, 2024.
The bank added that Mr Tuju has not demonstrated that payment of damages cannot be adequate and Mr Tuju is bound by the terms of their security documents and he cannot run away from his contractual obligation.
The bank revealed that only $10,000 has been paid since 2016.
The court said he was raising the issue of the constitutionality of the sale too late in the day as he has for years filed a multiplicity of suits.
The judge said EADB is a reputable bank that should have no difficulty in compensating Mr Tuju, should his case succeed.
“At this prima facie stage, I am satisfied that the plaintiffs were served with all the requisite statutory notices under the Land Act,” said the judge.
The two properties were charged as security for the loan, Mr Tuju borrowed in 2015.
In the dispute, his firms Dari Ltd and SAM Company Ltd entered into a facility agreement with the lender for a loan of $9.3 million in 2015 to expand his business.
The loan was secured by several forms of collaterals, including an indemnity and guarantee agreement on April 10, 2015.
Mr Tuju, however, accused the bank of failing to disburse the full amount thereby causing cash flow difficulties for the principal debtor.
This allegedly hindered its ability to fulfill its obligations under the agreement. He said negotiations between the parties ensued in a bid to resolve the dispute and although a settlement agreement was drafted, the bank moved to a UK court and obtained a judgment against him.
The matter has been litigated to the Supreme Court, where Mr Tuju has challenged the enforcement of a UK judgement, which found the former CS had breached the loan agreement.
