Victory for Njenga Karumes family as court kicks out trustees running his multi-billion empire

Trustees who have been running the late Njenga Karume’s businesses have been kicked out of the control of the multi-billion shilling empire due to accountability issues.

Njenga Karume is a former powerful cabinet minister who by the time of his death in 2012, had built an empire estimated to be worth Ksh.50 billion.

The businesses include the Jacaranda Hotel in Westlands, Indian Ocean Beach Resorts in Diani and Cianda House along Koinange Street.

The High Court has ordered the removal of Mr. George Ngugi Waireri, Mr. Kung’u Gatabaki and Margaret Nduta Kamithi as Chairman of the Trust and Trustees of the Njenga Karume Trust respectively and also from the Njenga Karume Trust Registered Trustees.

This was after some beneficiaries, who are children of the late minister, led by Albert Kigera, Lucy Karume and Samuel Wanjema, who were represented in Court by lawyers Peter Munge and Daniel Musyoka of MMC ASAFO applied for the removal of the Trustees.

According to the 136-page judgement delivered by Justice Roselyne Aburili on Thursday May 7, 2020 the three Trustees were found to have breached the Trust Deed and also held personally liable to indemnify the Njenga Karume Trust and the Njenga Karume Trust Registered Trustees for losses and damages suffered by the entities and their beneficiaries.

Before he died, Njenga Karume had established a private trust to which he transferred 99% of his businesses and he then appointed trustees to run them. After his death, and following the resignation of Justice Kihara Kariuki (retired), George Ngugi Waireri and Margaret Kamithi were appointed as trustees.

Njenga Karume’s kins said in the court papers that the appointment of Mr. George Ngugi Waireri, Mrs. Margaret Nduta Kamithi and Mr. James Raymond Njenga as the Trust’s Chairperson, new Trustee and a second observer respectively was done without notice or reference to the beneficiaries, regard to the provision of the Trust document or the Will and intention of their father.

The Court has directed the removed trustees to give an account of all transactions undertaken, payments made, funds received, and expenditures incurred on behalf of the Njenga Karume Trust since February 24, 2012 to-date.

“Upon such accounts being rendered, the court shall determine whether there was any dishonesty on the part of the Trustees in their dealings with the Trust assets and indemnity of the trust shall be ordered only after such evidence discloses dishonesty on the part of the Trustees,” said Justice Aburili in the ruling.

The court found that the trustees have also failed to account for Ksh.280 million being the balance of the proceeds of sale of Land Reference Number 3644 to Kenyatta University Retirement Benefit Scheme which had been left behind by the founder for purposes of settling debts and developing other properties.

The Karume kin had told the court they are yet to get details of various bank accounts held by their father before and after his death, transaction between companies and beneficiary accounts.

Trustees were also found to have borrowed substantially from financial institutions without consulting the beneficiaries of the Trust and its instruments.

The court agreed with the beneficiaries that they had been locked out of participation in running of the businesses, disposal of assets and treated with a lot of contempt, what has been attributed to among others, diminishing in value of the Jacaranda Hotel.

A Senior Partner in the Law firm of Iseme Kamau and Maema Advocates (IKM) has been directed to undertake the process of nominating the persons to fill the vacancies of the removed Trustees, taking into account the provisions of the Deed and that the Chairman of the Trust shall not be a beneficiary.

“I direct Mr. James Kamau of IKM shall supervise the exit process for the removed Trustees who shall prepare and file into court the said accounts within the next one hundred and eighty (180) days of this date,” said Judge Aburili.

The Court has said it will then assess the losses and damages incurred and/ or suffered by the Njenga Karume Trust out of the acts and actions of the Trustees of the Njenga Karume Trust and the Njenga Karume Trust Registered Trustees.