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Plight OF Kenyan Shareholders At Tatu City: Nahashon Nyagah Speaks

Nahashon Nyaga

The Chairman of Kofinaf Company Limited, who doubles as a director of Tatu City Ltd Mr Nahashon Nyagah, has revealed how wrangles started at the Tatu City project where foreign investors tried to swindle Kenyan investors.

Nyagah says in the affidavit that the first authorised and issued number of shares for Tatu City and Kofinaf was 1,575,000 and 4,500,000 shares respectively, out of which 1,574,993 shares in Tatu City are held by Cedar IV Limited and 4,499,994 shares in Kofinaf are held by Cedarsoc Limited.

In an affidavit presented to parliament,  Nyagah avers that they started the project with Bidco CEO Vimal Shah and Stephen Mwagiru under Waguthu Holdings Kenya Ltd (now Kofinaf) by buying 35% of shares owned by Socfinaf, a Belgian company that comprised a large coffee growing operation with milling and commercial operation activities.

Read: Another Bribery? MPs Engage In Shouting Spree Over Tatu City Scandal

The trio tried looking for money to invest, but due to heightened political temperatures it was hard. Among the potential investors they approached included Moscow-based Renaissance Capital, who declined their offer.

They did not give up. “Stephen Mwagiru, Vimal Shah and I once again presented the investment opportunity to Renaissance, this time not just as a coffee farming enterprise, but also a mixed-use urban development inspired by the ideals of Vision 2030. Renaissance bought into this concept (and this way the idea of Tatu City came to birth),” avers Nyagah.

With hopes of making it big, the Kenyan shareholders approached the Belgian investors and requested them to sell them their entire investment in Kenya. The Belgians accepted the proposal and agreed at a price of $105 million (Ksh10.5 billion) for the entire transaction.

Related: Interesting Facts About Tatu City That Have Been Hidden From The Public [Part 1]

Their hope lay in the hands of Renaissance, who had indicated their ability to fund raise for the entire investment on exclusive terms. Unknown to them (Kenyan investors), Renaissance were having serious financial strain who forced them to sell 50% of their stake to a Russian investor, and later all of it throwing the entire deal into a limbo.

Nahashon Nyaga

The Kenyan investors had no option but to work with the new Russian investor. They divided the investment transaction into two stages. In stage one $20 million (Ksh2 billion) would be used to purchase of Tatu City estate (approximately 2,500 acres) immediately which land would be transferred from Scofinaf to Waguthu Holdings.

In stage two, $65 million would be used to acquire 75% of shareholding in Scofinaf within a period of one year.

“The total investment required for phase two was approximately $65 million (Ksh6.5 billion), a collosal amount considering the tight liquidity prevailing then as a result of the Global Financial Crisis. The Kenyan shareholders who held the option sought a further extension from now the skeptical Belgians, whom we had all along assured of our ability to close the investment deal. While we wished to secure a minimum three-month extension, the Belgians granted us only a further one month with stringent conditions,” says Nyagah.

Renaissance came back as a paid transaction advisor, according to Nyagah.

Read: How Foreigner Stephen Jennings Swindled KRA Ksh6.5 Billion, Conned Shareholders And Clients

In mid-January 2010, Renaissance Capital informed us that they had managed to identify offshore lenders who were willing to raise all the money required for the investment. Because of the urgency of the matter, without even doing a due diligence on the said lenders who had been identified and introduced by Renaissance Capital, the Kenyan Shareholders agreed to the terms of the funding to raise a total sum of $70 million (Ksh7 billion), out of which Ksh6.5 billion would be paid to the Belgians and Ksh500 million for working capita. The acquisition of Socfinaf by Cedarsoc was completed in March 2010,” he adds.

Renaissance’s first attempt to defraud Kenyan shareholders took place when they tried to sneak in the Ksh500 million earlier secured for working capital as a loan from themselves to Tatu City, attracting interest at the rate of 33% pa.

To repay the loan of Ksh6.5 billion borrowed offshore and to finance the design and master planning of the Tatu City, the board of Socfinaf resolved to sell some land parcels that were considered non-strategic. To that effect, various land parcels were sold and the money was remitted to the facility agent overseas to repay the loan.

Read: Interesting Facts About Tatu City That Have Been Hidden From The Public [Part 2]

“All the land parcels earmarked for sale and others were sold and the money remmited to the Facility Agent to repay the loan. The Facility Agent who is under total and exclusive control of Renaissance has ignored pleas from Kenyan Shareholders and eventually outrightly refused to provide an account of the loan repayment thereof. This refusal and dishonesty from the representatives of Renaissance resulted in the current wrangles surrounding Tatu City Project and Kofinaf,” says Nyagah.

Renaissance was determined to swindle Kenyan investors, by technically taking over control and management of the affairs of Tatu City , Kofinaf as well as the offshore entities that own the Kenyan registered companies.

Nyagah avers that at a board meetings of Kofinaf/Tatu City, the directors unanimously resolved that the loans be subjected to an independent audit by PricewaterhouseCoopers (PwC). Renaissance thereafter attempted to compromise and influence the company secretary to falsify the minutes but he declined and opted to resign.

Read: Uhuru-Raila Handshake Was Useless, City Pastor Godfrey Migwi Says

Other matters that were of concern to the Kenyan shareholders included the unilateral take-over of management of the Kofinaf/Tatu City business to the exclusion of the Kenyans. One of the foreign directors, Stephen Jennings through his company, Randeavour was interfering with the day-to-day management of the business including appointing senior managers and project contractors.

Later, Renaissance representatives reneged on the earlier unanimous board resolution to appoint PwC to undertake a forensic audit of the loan.

“The Kenyan shareholders were of the view that the offshore loan had been repaid, if not over-repaid, by end of 2014,” writes Nyagah in the affidavit.

Read: Whatsapp To Introduce Ads To Statuses As From Next Year

Board meetings of the companies held in January and February 2015 ended in disarray when the Renaissance representatives insisted on proceeding with their unilateral decisions without regard to the views of Kenyan shareholders. Some of the decisions included removal of Chairman, Termination of employment of the chief Executive among others.

Failure and refusal by Renaissance to resolve the disputes at the board/shareholder level led the Kenyan Shareholders to file a civil suit at the High Court in Nairobi against the foreign directors and their associates for pilfering the assets of the companies.

In the suit, the Kenyan partners also demanded for a forensic audit of the loans, which was granted by the court, but never happened, due to frustrations that led to PwC’s withdrawal.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. Believes in unearthing societal rots that have been hidden from the public eye.
Follow me on Twitter @FmuliKE. Email francis@kahawatungu.com

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