An investigation into transactions on Sh17 billion property – discharge of collateral, transfer, subdivision, valuation, stamp duty assessment, payments and processing new titles – all completed in just three hours is far from over.
Last month, the Directorate of Criminal Investigations (DCI) summoned a Ministry of Lands official who raised alarm, adding a twist to the dispute.
The saga that dates back to 1993 appears to have split the DCI, given the latest development contradicts an investigation that concluded the transactions were dubious.
Did former Finance Minister Arthur Kinyanjui Magugu sell the 82.4 acres in Nairobi – currently valued at Sh17.05 billion – to a private firm on October 25, 1993?
That question forms the basis of a vicious ownership battle between the Magugu family and Karura Investments Ltd, the firm that insists it offset the former minister’s Sh24.7 million loan in return for the Muthaiga property.
After Magugu died in September 2012, his family started the succession process. He had acquired several pieces of land in his lifetime but never wrote a will.
On October 10, 2016, Justice William Musyoka of the High Court’s family division confirmed the widow, Margaret Wairimu Magugu, as the administrator of the estate.
The judge also confirmed the distribution of Magugu’s wealth. Ms Magugu was to take full possession of the 82.4 acres in Muthaiga. Real estate firm Hass Consult placed the value of an acre at Sh207 million in December, 2022.
But after the succession process was completed, Ms Magugu discovered another player laying claim to all but 19.1 acres – Karura Investments Ltd. The company was registered on August 2, 1993.
Karura Investments is owned by Sobhagyachand Vidhu Shah and Maneklal Rughani families – the brains behind Sarit Centre and Text Book Centre.
The tussle has attracted the attention of the courts, the National Land Commission (NLC), National Assembly and the DCI.
The Magugu family argues that it was impossible for the company to have obtained a clearance document for the loan, signed a sale agreement with Magugu, applied for division of the land after getting approvals and a title all in three hours on October 25, 1993.
In the four institutions fraud complaints were filed against it, Karura Investments maintains that it legally purchased the land, and that the widow is only challenging the company’s ownership on account of ignorance in property transfer.
Documents presented by Karura Investments in court, National Assembly, NLC and the DCI show that the Ministry’s central registry registered a transfer of the land to the company at 11.27am –three hours after start of business hours.
Magugu obtained the title deed for the 101 acres from Joreth Ltd – a firm at the centre of several land wrangles – on December 16, 1982.
He used the land, registered as L.R. 12422/9, as collateral when his company – Commercial Commodities Ltd – borrowed Sh25 million from Grindlays Bank, now trading as Stanbic.
In November 1988, Magugu instructed his surveyor James Kamwere to initiate division of the property into two – one parcel measuring 88.6 acres and another 12.9 acres.
Upon filing an application at the Survey of Kenya, Mr Kamwere was issued with a computation number, similar to a transaction ticket, indicated as 23380.
The process took five years. , and on October 25, 1993, the land was eventually subdivided into L.R. number 12422/203 measuring 12.9 acres and L.R. number 12422/204 measuring 88.6 acres on October 25, 1993.
Another application to subdivide the larger portion was made on the same morning, with the process being completed in three-and-a-half hours. The application was given the same computation number as Magugu’s from five years earlier – 23380.
The larger portion was split into L.R 12422/318 measuring 6.1 acres. This piece was registered to Magugu and the title deed was finalised in 2004 – eleven years later.
Another parcel, L.R 12422/319 measuring 82.4 acres was registered almost immediately to Karura Investments, with the title deed being ready on the same day, October 25, 1993.
That transfer is the source of conflict between the family and Karura.
Magugu’s kin say Karura Investments rode on the initial subdivision application to take over the 82.4 acres.
The Survey of Kenya usually issues one computation number – a unique identifier similar to a ticket – for every subdivision application. But in both subdivisions of the Muthaiga property, the number is 23380.
Priscilla Wango, a surveyor at the Ministry of Lands and seconded to the Survey of Kenya, authored a letter in 2019 to Ms Magugu’s lawyers stating that the property transfer was illegal on account of the computation number.
“A survey involving a subdivision is submitted as a new job. There was an irregularity and the Director of Survey is unable to state the purpose of survey of L.R. 12422/318 and 319 since it is not supported by complete survey record,” stated Ms Wango’s letter, which was part of NLC proceedings.
On April 11 2023, the DCI summoned Ms Wango to record a statement on why she authored the letter.
The NLC also raised concern about the number.
“It is practically impossible to register a discharge, a transfer, a subdivision, value a parcel of land, assess stamp duty and pay the same in less than three hours,” NLC investigator Antipas Nyanjwa said in his report.
Mr Nyanjwa’s report followed a complaint by Ms Magugu to the NLC. The commission, however, was unable to take action as NLC’s investigative mandate is limited to public land.
The widow filed complaints with the DCI and NLC. Parliament investigated the transfer following a petition filed by then-Cherangany MP Joshua Kutuny in 2021.
But the 12th Parliament’s term ended in June 2022 before compiling a report on the property’s transfer to Karura Investments.
Interestingly, the DCI appears divided. When the DCI detectives first investigated the matter in 2017, they were of the opinion that Karura Investments and its directors be charged with fraud.
Investigators had obtained statements from Survey of Kenya officials, who suggested that deed plans be recalled and cancelled.
But things hit a snag after the detectives submitted their report to a supervising officer. The file was never forwarded to the Director of Public Prosecutions.
The supervising officer has since been transferred to Mwea. Despite the transfer, the Saturday Nation has confirmed that he is still stationed at the DCI headquarters on Kiambu Road, Nairobi County.
Despite not providing a copy to any institution that has investigated the matter, Karura Investments insists that it signed a sale agreement with Magugu but that the document may have been misplaced by Hasmukhrai Manilal Parekh, the lawyer who reportedly represented both sides in the deal.
In 2020, the company told the NLC that Magugu’s loan had grown to Sh36.7 million on account of interest and penalties. It said in an affidavit that it offset the loan.
During the National Assembly hearings, Karura Investments directors Sureshchandra Shah and Suleiman Harunani said the company signed a sale agreement with Magugu. They did not submit a copy of the document.
“The sale was made in a hurry. Either Magugu may have remained with it or our lawyer then, who has since closed his firm and is aged man of over 90 years,” Mr Shah said.
Ms Magugu approached the High Court on January 17, 2017 seeking to quash the documents Karura is using to claim the land.
The widow said that she learnt of Karura Investments’ claim to the land years after Magugu’s death. She said files presented by Karurua were were full of irregularities.
Karura Investments’ documents show that the land initially registered as 12422/9 was divided into – 12422/203 and 12422/204 on October 25, 1993. On the same day, 12422/204 was subdivided into 12422/318 and 12422/319. The parcel 12422/319 was then registered to the company.
Before land is transferred, parties in the deal must file an application for consent to change ownership at the Land Control Board. Apart from hearing from the seller and buyer, the board invites any party opposed to the transfer to present their case.
Documents filed by Karura Investments in court indicate that her husband filed an application for consent to transfer of L.R12422/319 to Karura Investments on September 9, 1993 – more than a month before the land came into existence.
As at September 9 1993, the land was yet to be formally subdivided from L.R. number 12422/204. The documents show that the board granted consent a day later.
The application for consent in Karura Investments’ documents was only signed by the company’s representative. The official that signed them did not fill in the date. The slot reserved for Magugu’s signature is blank.
Karura Investments lawyer, Hasmukhrai Manilal Parekh, told NLC that the firm confirmed that Magugu owed Grindlays Bank Sh30.36 million as at July 27, 1993. A check on the loan balance in September 1993 indicated that the loan had grown to Sh36.7 million.
The company attached a cheque of Sh24.7 million to the documents. The cheque was issued to Shah & Parekh Advocates.
Mr Parekh said he remitted the money to Grindlays and offset Magugu’s loan. He did not, however, attach evidence of remittance.
In her complaint with the DCI, Ms Magugu also raised issue with the transfer of ownership document presented by the company.
The document contains stamps as evidence that it paid the taxman his dues.
According to the widow, stamping of transfer documents was reserved for small transactions in 1993. Transfer documents for large transactions was embossed.
Another individual laid claim to the land in March last year.
George Njoroge Kariuki sued Karura Investments, saying he bought the land from Magugu in 1994 for Sh50 million. Mr Kariuki says Karura Investments falsified documents to hijack his purchase of the property.
He had sought eviction orders against Karura Investments. High Court judge Edward Wabwoto granted the orders on March 9, 2023 and gave Mr Kariuki permission to evict Karura Investments.
Karura Investments challenged Justice Wabwoto’s orders at the Court of Appeal. The Appellate judges ordered that status quo be maintained on the land, which has effectively barred Mr Kariuki from taking possession of the prime property.