KCB to probe EnglishPoint Marina after court-ordered takeover

English Point Marina located in Mombasa

 The EnglishPoint Marina in Mombasa. 

Photo credit: Kevin Odit | Nation Media Group

Six years ago, the EnglishPoint Marina’s owners were living the dream. President Uhuru Kenyatta had just officially opened the doors to one of the few establishments in Kenya that best describe opulence – a hotel built and furnished to perfection, with equally luxurious apartments for sale within the same space.

Mr Alnoor Kanji, one of the two brothers that put up the hotel, said “we have brought a small piece of Monte Carlo to Kenya” during the official opening.

Thousands of wealthy individuals in Kenya and abroad were eyeing a stay at the resort, government institutions like the National Assembly listed the hotel as one of its preferred hospitality providers, and it was one of the very few privately-owned businesses in Kenya’s Vision 2030 project.

And why not? Aside from being top-notch, the hotel had bragging rights for being the first floating marina in East Africa.

Family feud

But in just over half a decade the development is debt distressed, in receivership, embroiled in a family feud and one of its directors has attracted police attention for allegedly masquerading as a lawyer.

Last week, the Court of Appeal sitting in Mombasa allowed KCB Group to take over the management of EnglishPoint Marina and conduct a forensic audit on the mixed use development.

For the hotel, KCB will certainly manage its affairs.

The 96 apartments that EnglishPoint Marina put up for sale in 2016 will, however, have their fate determined by the forensic audit.

In the event the audit reveals that more than half of the apartments have been sold, then homeowners will take over management by forming a company. Each homeowner will have one share in the management company.

If less than half of the apartments have been sold, then KCB Group’s appointed receiver will manage them as well.

Either way, the Kanji family will cede management of the apartments that have been a source of legal conflict with home owners.

The hotel’s owner, Pearl Beach Hotels Ltd, has challenged KCB’s Sh5.2 billion debt claim and argues that the lender overcharged the loan by Sh893 million.

High Court Judge Dora Chepkwony had in July issued orders barring KCB from taking over management of the hotel. But the Court of Appeal decision now means EnglishPoint Marina is in receivership.

“We hereby give our decision granting the notice of motion dated July 22, 2022 and issue an order staying the ruling and orders of the Honourable Lady Justice Dorah Chepkwony delivered on July 12, 2022, and stay any further proceedings in High Court Commercial Court … pending the hearing and determination of the applicant’s (KCB) intended appeal,” the Court of Appeal ruled.

Auctioning hotel

This means that KCB can go through with the entire receivership process, including auctioning of the hotel and its assets to recover the disputed loan.

It also means that the suit by EnglishPoint Marina at the High Court to stop the receivership will be suspended until KCB’s application at the Court of Appeal is determined.

At the Court of Appeal, KCB is seeking a determination that EnglishPoint Marina did not deserve reprieve as given by Justice Chepkwony.

In the event that the bank auctions the hotel and its assets but the amount raised is insufficient to recover the full amount, KCB will then be free to go after some assets owned by EnglishPoint Marina’s directors.

The directors issued personal guarantees for the loan.

EnglishPoint Marina is owned by Amyn Kanji, his wife Leila, brother Alnoor, sister-in-law Nafisa and Nazir Jinnah.

All the shareholders are also directors in the hotel.

The Kanji family also owns Pinewood Beach Resort & Spa in Diani, which might also be at risk should KCB opt to go for assets owned by EnglishPoint Marina directors.

Other assets owned by the directors that may be at risk of auction include cars and houses.

The forensic audit by KCB is also expected to look into whether the firm’s directors misappropriated funds, something that could border on criminal offences.

A section of buyers has sued EnglishPoint Marina for denying them a chance to sublet their properties, and allegedly ensuring that any overnight guest is instead diverted to the hotel.

In the suit, the buyers have also accused EnglishPoint Marina’s owners of levying inflated service charges after which electricity is still disconnected from their apartments.

They add that an internal memo from the marina managers ordered staff to discriminate against black African homeowners by implementing strict rules that deny them access to their properties.

And as EnglishPoint Marina fights the civil suit, the Directorate of Criminal Investigations (DCI) is investigating it for alleged money laundering.

Minting millions

The police are also investigating one of the hotel’s directors, Nazir Jinnah, for allegedly impersonating a lawyer and minting millions from several clients who fell for his gimmicks.

Mr Jinnah is the EnglishPoint Marina’s legal director.

The DCI in March intended to charge Mr Jinnah with impersonation, an offence that carries a three-year jail term if found guilty. The prosecution was, however, deferred.

Interestingly, Amyn Kanji has filed a complaint with the DCI as well, asking it to investigate his brother Alnoor, sister-in-law Nafisa and Mr Jinnah for fraud.

Amyn claims that some of his shares were irregularly transferred to other shareholders, which has reduced his stake in the hotel from 30 per cent to 0.4 per cent.

He adds that the share transfer was backed by minutes of a physical board meeting held at the hotel, in spite of the fact that Amyn was out of the country.

In the complaint, Amyn argues that the only finances put into the hotel other than the KCB loan came from him and his wife. He claims to have invested Sh273 million to acquire Pearl Beach Hotels Ltd to fund part of the construction, but has now been robbed of his shares.

He claims that the other shareholders falsely declared to the Kenya Revenue Authority that he was paid a Sh787,852 salary in February, 2020.

“I was not paid any wage for February 2020, and therefore do not understand why my salary was included for the month. From the face of it, it appears that Nazir, Alnoor and Nafisa deliberately made a false declaration to KRA,” Amyn says.

He holds that EnglishPoint Marina may have been turned into a vehicle for committing fraudulent acts and wants the DCI to investigate its activities.