The High Court has dismissed a theft case against three Fig Tree Hotel directors, barely two months after warring owners rejected alternative dispute resolution mechanisms.
Chief Magistrate Francis Andayi acquitted Lucy Waithera Mwangi, Julius Kariuki Mwangi and John Irungu Githinji of stealing Sh48.8 million from the hotel.
The decision has cleared the way for the courts to tackle ownership wrangles that have plagued the hotel since 2013.
“This decision will spark resolution of the High Court case, which this court has no jurisdiction to discuss,” Mr Andayi said in his judgment.
The magistrate said prosecutors failed to provide evidence that the three stole the money, which was paid as compensation for the compulsory acquisition of part of Fig Tree’s land for the expansion of Thika Road.
“Two auditors who appeared before me said the law allows directors of a company to operate separate accounts even without a resolution of the shareholders,” Mr Andayi stated.
Prosecutors had claimed that the directors pocketed the money paid by the government for the land.
“They committed no wrong,” ruled Mr Andayi, terminating the criminal case that he noted was fuelled by hate and greed among the shareholders.
The three directors had deposited the money in two accounts at Equity Bank in Donholm and Ngara, Nairobi.
Besides the Equity accounts, Mr Andayi said the directors also operated other bank accounts that the 21 shareholders of Fig Tree had authorised them to open.
“When police obtained orders to confiscate the funds in the two accounts they recovered over Sh22.3 million, which they produced as exhibit in court,” the magistrate noted.
The complainants, led by Stephen Kimang’a, obtained further court orders for the Sh22.3 million to be released to them to help run the hotel. But the hotel was closed down and is yet to resume operations.
The magistrate said the accused had told the court they spent the Sh26 million on renovations for the hotel.
Mr Andayi said that when he visited the scene he saw evidence of renovations and other work to the parking, shops, sewer line, kitchen and rooms.
“The Sh48.8 million was a windfall as it had not been budgeted for by Fig Tree shareholders, so the directors used part of it to improve the three-star hotel,” Mr Andayi said,
He went on to state that although the three were charged with stealing Sh48.8 million, some Sh22.3 million was taken by the complainants and the three could not account for it.
The company has property in Nairobi, Kiambu, Thika, Murang’a and Nyandarua worth billions of shillings.
Besides the Sh48.8 million theft case, there are lawsuits in the commercial and family divisions of the High Court over directorship, shareholding and succession involving the directors.
The woes for the accused began when over 100 police officers from Central, Kilimani, Parklands and Pangani and over 500 goons descended on them and chased them away from the hotel alongside guests. The directors led by Mr Kimang’a then took control of the hotel.
"How then could police charge the three directors with stealing over Sh48 million when Kimang’a took Sh22.3 million in the name of running the hotel after the removal of the accused from the helm of management of Fig Tree?” Mr Andayi queried.
In her testimony, Ms Waithera named the founders of Fig Tree as Patrick Mwangi Githinji, Mwangi Gacau, Benson Mwangi Kimang’a, Mwangi Kariuki and Fredrick John Njora.
Some of the five have since died and their shares inherited by their children.
“Stephen Maina Kimang’a has been sued by the children of his father’s first wife, seeking to be allotted their share of his estate,” Ms Waithera said.