Fight for control of leading supermarket chain Naivas intensifies


A Naivas supermarket outlet in Ongata Rongai.

Photo credit: File | Nation Media Group

The family tussle for control and ownership of the country's leading supermarket chain, Naivas, continues to rage after the eldest son of the founder - the late Peter Mukuha Kago - went to court seeking to have his other siblings and directors of the retailer punished for contempt of court.

Newton Kagira Mukuha, the eldest son of the Kagos, who is embroiled in a succession battle with his siblings, has filed an application seeking to have them jailed for six months for allegedly disobeying court orders issued on 25 November 2021.

The Court of Appeal had ordered a status quo on shares and ownership pending the hearing and determination of a bitter dispute over the ownership of the country's leading retailer. 

According to Mr Kagira, on 25 November 2021, the Court of Appeal in Nakuru issued an order directing that the status quo of the disputed shares be maintained pending the determination of an appeal to the Court of Appeal.

In 2021, Kagira, having lost a previous case, filed an application in the Court of Appeal seeking to preserve his late father's 10,000 shares in Naivas Limited.

However, he argued in court that he had received credible information that the company, through its directors and shareholders, had sold its shares, including the disputed ones.

He argues that he would potentially lose his initial investment and subsequent dividends from the disputed shares.

Kagira is also seeking the revocation of letters of administration issued to his late brother, Simon Gashwe.

He says Gashwe died before the completion of the distribution of shares in Standard Chartered Bank, cash in Barclays Bank (now ABSA Bank), cash in Kenya Commercial Bank and a 20 per cent shareholding in Naivas Limited, all of which were assets of their late father's estate.

Kagira argues that Gashwe's death is sufficient grounds to revoke the grant of letters of administration. 

The granting of a fresh dispensation, he says, will facilitate the completion of the process of distributing the shares of the estate to the respective beneficiaries.

In his application to the court, Mr Kagira alleges that Naivas Limited, through its directors and shareholders, has sold its shares, including the disputed shares, in flagrant disregard of the court's orders.

Naivas International Kagira was incorporated as a private company in Mauritius on 16 October 2015.

He revealed that on August 8, 2018, Naivas Holdings Ltd changed its name to Gakiwawa Family Investment.

"In flagrant disregard and violation of the status quo order dated 25 November 2021, on or about 23 June 2022, a share purchase agreement in respect of Naivas International was entered into between, inter alia, Amethis Retail and its partners," Mr Kagira said.

According to Mr Kagira, Naivas Ltd issued a notice on July 2023 stating that IBL Group would subscribe for an additional 11 per cent shareholding in Naivas International with effect from 30 June 2023, bringing IBL's shareholding to 51 per cent.

However, in their defence, Mr Mukuha and Naivas Limited contested Kagira's application, arguing that Naivas Limited's shareholding had not been disturbed in any way.

They described Kagira's application as an attempt to besmirch Naivas Limited in the eyes of the court and the public, as evidenced by his inclusion of foreign companies in the application.

The contempt application will be heard on 24 November. 

Since 2013, Mr Kagira has been feuding with his younger brothers for control of the multi-billion-shilling company. 

Mr Kagira accuses his brothers, the late Simon Gashwe and another Mr David Kimani, of fraudulently colluding to exclude him as one of the registered owners of Naivas, thereby disinheriting him from both his and his father's shares.

In March 2023, Newton Kagira Mukuha hired top law firm Ahmednasir Abdullahi Advocates LLP to represent him in the latest legal battle over a stake in the giant retail chain.

Lawyers at Ahmednasir Abdullahi Advocates LL entered the case with a letter to the Registrar of Companies, asking for the current shareholding structure of Naivas Limited.

The law firm also asked for any changes to the company following the recent acquisition of shares by private equity firms, as well as copies of all returns filed by the retailer since it commenced operations.

In court papers, Kagira has alleged that her father Kago called a family meeting in December 1989, which he allegedly attended alongside Kago, Kimani, Grace Wambui, Linet Wairimu, Robert Njau and Simon Gashwe (Mukuha's late father), where the family allegedly discussed and agreed to start the business.

"Kimani contributed Sh10,000, Kago Sh30,000, Wambui Sh25,000, Kagira Sh20,000 and Wairimu Sh15,000, totalling Sh100,000," Kagira's court papers read.

He added that the family agreed that each individual's contribution would form the basis of their shareholding in the company.

Kagira argues that he attended the said meeting, allegedly called by supermarket founder Peter Kago at his home in Cherangani, Kitale, where the contributions were made to set up the company.