How NLC issued two separate award letters for compensation

The National Land Commission issued two separate letters with different figures for compensation to a company embroiled in a Sh109 million compensation saga, the Star has learnt.

The first letter, dated October 6, 2015, was to Tornado Carriers Limited. It had initially indicated a Sh34.5 million award, being costs for improvements (Sh12.3 million), the value of the land (Sh15 million) and total compensation, inclusive of 15 per cent disturbance allowance.

The second letter dated September 4, 2017, had listed the award as Sh75.2 million, with the total value of improvements being Sh65.4million.

Both letters were signed by NLC Valuation and Taxation director Salome Munubi.

Tornado Carriers had, after the first letter of award, however, rejected the Sh34 million compensation for  0.0752 hectares, which was to be used to enlarge a public road as part of the Port Reitz/Moi International Airport Road.

The company asked to be compensated inclusive of the infrastructure which would have been affected by the acquisition.

At the premises, Tornado Carriers has constructed an office block, fuel pump, underground diesel tank, staff quarters, a generator store, drivers shed and a workshop, a general store block, staff toilets, a boundary perimeter wall, a borehole and well.

“In the event our land is acquired, we will lose our business, hence our application to be paid loss of business as per the law established,” the letter noted.

On May 25, 2016, a valuation from Fairlane Valuers presented by Antony Khaemba estimated the property to be worth Sh180 million going by the open market.

Further, a January 11, 2017 letter from former NLC chairman Muhammad Swazuri to the Kenya National Highway Authority requested Munubi and her deputy, Joash Oindo, to be paid Sh50,400 each as per diem covering three nights, for them to visit Mombasa from January 16-19. They were to deal with emerging issues in regards to the five plots earmarked for compulsory acquisition.

Further, the NLC had on January 15, 2018, written to the company indicating it will take possession of the plot at the expiry of 15 days from January 15, 2018.

“You are to vacate the land and NLC will take possession at the expiry of the notice, with land being vested in the government. Under this notice, you should deliver the documents of title to the Chief Land registrar for amendment/cancellation,” Swazuri said.

The documents formed part of the EACC and Olindo's affidavits and annexures presented in court.

But the EACC also noted that the suit plot was encumbered to Imperial Bank Limited for Sh9.5 million on June 30, 2005.

“Two plots have been used as security for several financing facilities from Imperial Bank. As at December 31, 2018, the company is indebted to the bank to the tune of Sh137,271,828,” EACC advocate Jackie Kibogy said in her affidavit.

The government, she said, has been exposed to a grave risk of loss of public funds. In the likely event that there is a default, the government will be forced to offset the loan facilities or incur costs as a result of litigation in securing an unencumbered title.

Kibogy also said EACC had established that half of the amount was paid back as kickbacks to NLC officials.

Tornado Carriers directors Shakil Ahmed Khan and Nazir Ahmed Matabkhan, confirmed rejecting the first award but accepted the second offer of Sh75,268,253.

“In November 2017, NLC paid Sh55,269,363, leaving a balance of Sh19,998,890. That part payment was received in the company’s account at SBM Bank Limited,”  Tornado lawyer Kinyua Kamundi said.

He said his clients waited for the payment of the balance to enable them to demolish the multi-storey building and other developments so as to relocate.

Tornado had a loan with SBM Bank Limited and feared the financial institution would recover it from the Sh55.2million.

“They were apprehensive that SBM Bank, the successor to Fidelity Commercial Bank Limited, was a newly established bank owned by persons in Mauritius and being concerned of the security of the money, arranged to move it to two accounts one belonging to Asia Akhtar Nazir Ahmed, a wife, and Tarah Begum Khan, a daughter-in-law to the two directors, who opened two fixed deposit accounts at NIC Bank Ltd,” Kamundi said.

Kamundi added that Shakil is the signatory to the accounts and the funds are held in full.

“The company did not commit any offence by transferring its money for safety reasons from one bank to another,” he added.

The directors had informed the anti-graft agency that if the NLC and KenNHA are no longer interested in acquiring a portion of the suit property, and they should instead publish a Gazette notice or inform them in writing upon which they will arrange to refund the Sh55.2 million.

“EACC has obtained orders preserving the funds paid by the NLC as partial compensation. The company cannot deal with a portion of the suit property because it has already received partial payment. The directors cannot be subjected to restraining orders, the deprivation of property without full compensation and still be investigated, arrested, charged and prosecuted. This amounts to gross abuse of power,” Kamundi said.

He said the directors have been subjected to more than double jeopardy and to multiple penalties for the same alleged violation by having the property encumbered by the Gazette notice and the partial payment for compensation, by the orders restraining the dealing with the partial payment and now by the threatened arrest and prosecution.

“The petitioner's position is that the revised award the company was given in writing is dated September 2017 and is the sum of Sh75,267,253. The petitioner was not offered any award in the sum of Sh109,769,363 and no copy of any such award has been included in any proceedings in any court.” 

Should the government pay the balance of the compensation without recovering Sh54.5 million from state and public officers, he said, it will have spent Sh129,768,253 to acquire 0.0752 ha from the suit property.