Billionaire banker, Mugo Mungai, goes down fighting Moi’s injustices

 Shortly after Yoweri Museveni came to power in Uganda, in 1986, Kenyan banker Mugo Mungai flew to Kampala with a burning mission: He wanted to open a new branch of his Pioneer Building Society and Capital Finance.

The business idea was right, but the timing was wrong. Former President Daniel Moi suspected that Libyan leader Muammar Gaddafi and Museveni were working against him. He was also suspicious of wealthy Mt Kenya entrepreneurs and their domination of national politics.

Mungai, who passed on this week at 81, would face the wrath of President Moi's government over that visit. He lost his bank and all his properties.

"You went to buy guns?" Mungai, then 44, was asked by interrogators from the Criminal Investigation Department (CID), then headed by Noah arap Too. As Mungai would later tell this writer at his Spartan United Kenya Club office, the timing of his Uganda visit was wrong. "I didn't know that I was a marked man." For Mungai, it did not rain; it poured.

Moi's crackdown on Mwakenya, a proscribed ideological-cum-political grouping, had reached a crescendo in 1986. He had not only closed down the University of Nairobi, but also arrested more than 100 people on suspicion of either belonging to the underground movement or processing the Mwakenya publication.

Read: The notorious Romanian dictator who taught Moi regime the art of brutality

On the morning of November 13, 1986, the Registrar of Building Societies, Joseph King'arui, wrote a one-page memo and closed Pioneer Building Society and later Capital Finance Limited. Mungai was shattered. Not only was his flagship business, Pioneer Building Society and Capital Finance Limited, taken over by the Central Bank of Kenya, but so was his prime property in the city center, Capital House. Also seized were 259 maisonettes in Pioneer Estate, 50 half-acre plots in the up-market Gigiri, near UNEP and the US Embassy, a building in Thika town, and a one-storey building in Nakuru, now occupied by KCB.

Mungai died fighting to recover these properties. As he had told the High Court in his affidavit, "The Registrar of Building Societies ambushed me and purported to take over PBS. He claimed to have investigated PBS and was of the opinion that it should be dissolved."

According to Mungai, there was no reason to liquidate his businesses. He was not facing any crisis: "I had fixed deposits at various banks of Sh30 million and miscellaneous investments worth Sh145 million. My advances and loans totaled Sh160 million."

Aware that this was a political fight, he contacted politicians, hoping they could intervene on his behalf. He was still hopeful. After all, he had not wronged anyone. On the verge of losing hope, he was advised to see President Moi. Mungai and Moi were acquaintances, and during better days, he was one of the businessmen who would troop to State House with cheques to support the regular Nyayo Harambees and projects.

After a long pause, Mungai continued his narration: "I went to Kabarak one morning in 2000 to see President Moi. Moi knew me. I used to go to State House often to take donations to him, just like everybody else in those days. We talked very diplomatically, and I told him I needed his help. He promised me that he would sort out the matter, and I gave him some written facts on my banks and properties."

As Mungai drove from Moi's Kabarak home, Nakuru, he naively thought that Moi meant every promise he made. He was wrong. After waiting for one year and making follow-ups, he went to the Office of the President to see President Moi, who had appointed a new Dream Team with reformers led by Dr Richard Leakey. It was a brief meeting. The only thing Moi told him was, "hiyo nakumbuka". He could not pester him further.

When Dr Leakey, as the Head of Civil Service and Secretary to the Cabinet, sent a letter to Mungai a few weeks later, he hoped the solution had finally been found. But after opening the letter, he was shocked: "This matter should not be dealt here," Dr Leakey said in his letter.

"I was shattered," Mungai told me. Interestingly, he continued to seek an audience with President Moi. After all, he was the only one who could solve the matter. In May 2002, as President Moi reached out to the Mt Kenya region to support Uhuru Kenyatta's candidacy for president,  Mungai was invited to State House, Nairobi. Moi and Mungai had a candid talk, and Mungai was under the impression that Moi would hand back the two banks and the assets.

Pioneer Building Society

"Moi left his office and escorted me up to the public car park. I got the impression that he would indeed help me recover my properties. But I was wrong. Seven months later, I saw him on television handing over power to Kibaki."

At only 35, Mungai had put all his efforts into building a bank. It was a dream come true as customers flocked in. He lived well and sponsored key golf tournaments in the country. He also invested wisely. As the brains behind Pioneer Building Society, whose only rival was the East African Building Society, Mungai had made many friends. But as he went down, they also vanished.

"I was destroyed," he told me as he paused. His office was not lavish. It had basic furniture: a small-space sofa, a desk, table, chairs, and file cabinets containing a few lever-arch files.

"At first, I thought I knew important people. But when I went down, they all disappeared," he said as a matter of fact.

In 1978, Mungai, a Thurrock Technical College and Waltham Forest graduate in the UK, was licensed to operate a building society. He was to give loans and mortgages to his customers. As a trained accountant and certified public secretary, Mungai had the confidence of an eagle.

Born in Kanyariri in Kabete, Mungai had trained in shorthand and worked as a stenographer. His first job in 1959 was as a secretary to Kimani Ngumba, a school supervisor at the Christian Churches Educational Association, a body formed by the Anglican Church in 1958 to coordinate its educational activities in the country.

Ngumba would later rise to become Nairobi's mayor, and in February 1983, he registered his bank, Rural Urban Credit Finance Ltd, following Mungai's footsteps. Others who came after Mungai were Equity Building Society, Family Finance, Nationwide Finance, and Jimba Credit.

"Before I registered Pioneer Building Society in 1978, my only competitor was the East African Building Society. There was no other operating at that time," he had pointed out. East African Building Society was founded by the late Kenyan billionaire Lalit Pandit in 1959 under the Building Societies Act of 1956.

By the time Mungai was setting up Pioneer Building Society, the banking landscape was dominated by foreign-owned banks. It was out of a nasty experience that Mungai decided to start a bank. In 1978, he told me, he had sought a Sh150,000 loan from a bank.

Frustrations

However, after he charged his property, he waited for five months. “I was flabbergasted. I withdrew the title and decided that I must start a local bank if this is the kind of frustrations people are going through."

Mungai went to the Government Printer and bought the Banking Act, the Hire Purchase Act, and the Building Societies Act. Since the capital required to start a bank was enormous, he settled for a building society. He was 35. Building societies were not popular. When he sought to register a building society, Mungai was curtly told as he looked for official registration forms: "Nobody registers those things….Go and tear the sample registration form [at the back of the Act] and bring it back."

On November 3, 1978, he was licensed to operate a building society. On March 13, 1980, he got another license under the Banking Act to open Capital Finance Limited. On November 13, 1986, the Registrar of Building Societies closed them. By then, Mungai had eight branches countrywide and hoped to extend to Uganda.

During the hearing of his case, Mungai had explained to the Court why he took so long to fight back:

 "Many indigenous banks were under siege and attack from the ruling political establishment at that time. Thus, given the menacing nature of the visit by (Registrar of Building Societies representatives) Messrs William Ikapel and A.S. Garama and the mere shock and audacity of the invasion and the prevailing political environment, I was unable to question the takeover, and, under duress, I surrendered."

If Justice-delayed-is-justice-denied were a person, Mungai would have been the ultimate symbol. He will be buried on February 1, 2024.

[email protected] @johnkamau1