kibati

Telkom Kenya CEO Mugo Kibati. He has said the firm will no longer be pursuing the proposed joint venture transaction with Airtel Networks Kenya Limited.

| File | Nation Media Group

Controversy stalks Sh14bn land claimed by pensioners, Telkom and Joho-linked firm

Controversy continues to stalk a 79-acre piece of land on Ngong Road, after more than 300 pensioners were allowed to privately prosecute senior Telkom Kenya officials for alleged fraudulent dealings with one of Nairobi’s most prime pieces of real estate.

CEO Mugo Kibati is set to face land fraud charges alongside his predecessor Michael Ghossein, secretary Lois Allela and board members Eddy Njoroge, Jinaro Kibet, Dorcus Kombo and Sayyid Said.

Magistrate Kennedy Cheruiyot has allowed Postel Housing Cooperative Society to pursue the charges after ruling that Director of Public Prosecutions Noordin Haji has failed to prosecute Telkom Kenya officials for selling the prime land for a song.

The property was for years at the centre of cases in court and arbitration, with ownership claimed by Mombasa Governor Hassan Joho and businessman Francis Mburu, who has for years had controversial battles with the government over compensation for land in Ruaraka.

Postel had, in 2009, agreed to cede its interest in the property to Mr Mburu’s Exclusive Estates Limited in an out-of-court deal following a botched development contract between the two.

The land is on Ngong Road, about a kilometre from the Jamhuri Showground.

Acquire land

Interestingly, the government is constructing a modern sports complex on part of the property after invoking its right to compulsorily acquire land.

Postel says it should have been the institution to receive compensation for the property.

But the acquisition could become a nightmare for taxpayers, as Postel is now challenging the government’s decision to engage Telkom on the purchase.

The sports complex will have four football pitches, one rugby pitch and tracks for athletics. It will also have a hockey pitch and other training amenities.

Two years after Postel and Exclusive Estates struck their deal, Telkom agreed to sell the entire 79-acre parcel to Aftraco Limited, a company associated with Mr Joho for Sh1.52 billion.

Aftraco paid Telkom Sh152 million at the time as a 10 per cent deposit pending completion of ownership transfers.

But the deal collapsed after Postel and Mr Mburu’s Exclusive Estates laid claim to the land.

Exclusive Estates and Aftraco each initiated separate arbitration proceedings before lawyers Zehrabanu Janmohammed and Antony F Gross respectively.

In 2019, Ms Janmohammed ruled that Mr Mburu’s Exclusive Estates Limited is entitled to 60 of the 79 acres.

The property’s records indicate that the Kenya Posts and Telecommunications Company (KPTC), which is now Telkom Kenya, excised the land and sold it to Postel, whose members were the telco’s employees, on January 19, 1993, for Sh21 million.

Nine days later, the pension scheme entered into a contract with Exclusive Estates for development of 514 houses for Postel’s members.

But in 1995 the pension scheme backed out of the deal, prompting Mr Mburu’s company to sue for damages. Exclusive Estates won the case, and was awarded the property.

At the time Mr Mburu’s firm won the land battle, Postel had not finished paying for the land. Postel made its final payment for the land in 2006.

In 2009, Postel gave up its fight and agreed to transfer the property to Mr Mburu’s firm. But before the transfers could be done, Telkom Kenya sold the same land to Aftraco.

Postel’s members argue that it acquired the prime property 28 years ago, but Telkom Kenya proceeded to sell the land for Sh1.5 billion – lower than its true value. Mr Cheruiyot agreed with the pension scheme in allowing the private prosecution.

“No action was taken against them (Telkom Kenya officials), yet their upmarket parcel of land acquired 28 years ago worth Sh14 billion was sold away at a throwaway price of Sh1.5 billion by the CEO and the board,” Mr Cheruiyot ruled.

The magistrate has directed Postel Housing Co-operative Society Ltd to draft charges then file them at the Milimani Law Courts’ criminal registry on or before November 8.

He further directed Postel’s lawyer, Mr Xavier Baraka, to get court summonses and serve the intended accused persons to appear in court on November 8, to plead to the charges.

Postel Sacco

In his ruling, Mr Cheruiyot said evidence presented by Postel Sacco and its members Henry Belsoi, Amson Kibii and Stephen Magoma has exposed ineptitude on the part of the DPP and the Director of Criminal Investigations (DCI) in prosecuting the CEO and the others over the matter.

In their evidence to the court, Postel Sacco members Belsoi, Kibii and Magoma said the 60 acres is part of a 79-acre parcel of land acquired by the defunct KPTC on January 19, 1993.

The members told the court they bought land at Sh21 million but it was never transferred to them by Telkom, which inherited KPTC assets.

Postel claimed that the decision to sell the land to Aftraco was arrived at by the board members it now seeks to prosecute.

“The said action is not only fraudulent and criminal, but also meant to defraud us our right over the asset and deny us opportunity to be compensated by the National Land Commission, which is set to acquire the said land for public use,” Postel told the court.

The court heard that the last valuation done on the property, at the request of Telkom, returned a value of Sh14 billion.