Uhuru Entangled in S.K Macharia Sh690m Legal Row
President Uhuru Kenyatta is entangled in a legal battle in which media owner S.K Macharia is seeking damages of Sh690 million from the government for cutting short an overdraft facility with Standard Chartered Bank.
Mr Macharia, who owns Royal Media, says in courtdocuments that the president in 1999 along with former Kenya Power CEO Samuel Gichuru urged StanChart to cut links with Royal Credit Limited—which was owned by the businessman.
He alleges that StanChart recalled an overdraft of Sh154 million—which had beenrunning since 1988—after the lender was threatened it would lose the Kenya Power account. He said this led Royal Credit Limited which dealt in credit cards to suffer and close shop.
Mr Macharia is demanding damages for loss of business with the bank and the Attorney General (AG) being defendants.
He is demanding the Sh690 million and cost of suit from StanChart and declaration against the AG that Mr Macharia’s rights were infringed.
Mr Kenyatta who was then KANU chairman in charge of Thika branch, and Mr Gichuru are alleged to have been acting for the Moi government.
“In February 1999, the government of Kenya through State agents sent to the 1st defendant (Standard Chartered Bank) by the office of the president, namely, Mr Samuel Gichuru and Mr Uhuru Kenyatta, demanded that the 1st defendant closes down forthwith the business of the 1st plaintiff (Royal Credit),” read the courtdocuments.
“If it (StanChart) did not wish to lose to another Kenyan bank the Kenya Power, its biggest customer in Kenya. At the time it arbitrarily ordered the Royal Credit to move its credit business elsewhere and refused to honour cheques drawn in favour of merchants.”
Mr Macharia says he made losses of Sh161 million on plant and equipment, Sh160 million from franchise and Sh369 million from uncollected dues owed by the holders of cards.
He supported President Kenyatta’s opponent Raila Odinga at March 4 GeneralElection. The businessman has had long running court battles with the government that has sucked in companies like Kenya Commercial Bank and StanChart.
Mr Macharia traces his tribulations to his differences with former President Daniel Moi, who allegedly ordered for cancellation of business transactions involving hiscompanies including Madhupaper International Limited.
The High Court on Tuesday said the legal dispute over Royal Credit can proceed despite opposition from the AG. Justice Daniel Musinga said the push by the petitioner to seek justice following the botched bank deal cannot be dismissed without trial.
Judge Musinga presided over the hearing of AG’s application before his appointment as Court of Appeal Judge. The ruling was delivered on his behalf by High Court Judge Jonathan Havelock.
The judge observed that from the time the case was filed in December 2001, nothing much happened until December 2008 when AG applied to end the case. “It is not clear why the 2nd defendant had to wait for more than seven years before filing the said application,” observed Justice Musinga.
In 2008, the AG who is listed as a respondent, filed an application seeking to strike out the suit on grounds that the two—Mr Gichuru and Mr Kenyatta—were not State agents at the time and therefore the case cannot be instituted against the government. The AG also said the case is time bared.
But despite the names of President Kenyatta and Mr Gichuru featuring in the controversy, they are not listed as party to the case.
StanChart admits that it had provided overdraft facilities to the Royal Credit but denies that the decision to end the contract was influenced by Mr Kenyatta and Mr Gichuru or any other force outside the bank.
The bank says the agreement expired in April 1998 and the same was not renewed after Royal Credit failed to pay back the money already advanced.
Last year, the Supreme Court ended another long-running court battle between Mr Macharia and KCB.
Mr Macharia and his company, Madhupaper International Limited, in liquidation, appealed to the Supreme Court against a 2008 Court of Appeal ruling that reversed a Sh56 million award to them against KCB.
The application was one of the most protracted disputes between an individual and abank that started in 1981 when the company borrowed Sh30 million for expansion.
According to Mr Macharia, Mr Moi ordered the project cancelled, disrupting repayment of the loan.