London Court fines Vimal Shah, ex-CBK boss billions


Business mogul, Vimal Shah








Bidco chief executive Vimal Shah, ex-Central Bank governor Nahshon Nyagah and coffee farmer Stephen Mwagiru could face international sanctions before Christmas if they fail to pay close to Sh2 billion in damages to the major investors in the multi-billion-dollar Tatu City.
After months of accusations, counter-accusations and propaganda war waged on all types of media, the chicken are coming home to roost, and the Kenyan minority shareholders should have a reason to fear for their ability to do business should New Zealander Stephen Jennings call their bluff on their persistent efforts to frustrate the Tatu satellite city.
In February 2018, the London Court of International Arbitration ruled that Shah, Nahashon Nyagah, Stephen Mwagiru, and their local associates should pay over $17million for damages, interest and costs to SCF Holdings II, which is associated with Jennings, after determining that they had defrauded the developer. Interestingly, they did not challenge the award by the London court within the permitted 28 days — and for that they plunged themselves in a legal cistern, and must pay up.
The sanctions against Shah, Nyagah and Mwagiru – which could include banks refusing to do business with them and their relatives, associates and businesses, and visa bans – highlight how the government needs to manage legal and commercial challenges that many foreign investors encounter in Kenya, which is East Africa’s dominant economy. Economic analysts have argued that unless the government steps in to secure foreign investors from sweet-talking wheelerdealers who mostly package themselves as wealthy investment partners, then the efforts of the president to attract direct foreign investments will become a nullity.
Jennings’ battles to save his investments in Tatu City is a shocker to a Kenyan cartel that has always used government connections to defraud others, and later play holy. “You’ve got to have the temperament and nerves to fight because here are extortionists who have taken advantage of some government institutions to try to scare us to abandon the billions we have invested in Tatu City,” said Jennings while admitting the local partners “looked good on paper” but that he did not do sufficient due diligence before investing. He claimed that the prospective local investors employed a mix of PR, the allure of offices they previously held and their known investments to easily pass themselves as God’s best gift to Kenya.
At paragraph 556 of the 127-page ruling, the London Court of International Arbitration ordered, declared and decided that Manhattan Coffee Investment Holdings, the Mauritius company owned by Shah, Nyagah and Mwagiru was guilty of misrepresentation and forgery, and awarded Jennings various damages and costs totaling to about $17 million. The amount continues to attract interest, a fact that complicates the matters further for the Shah and company.
Shah has defended himself by arguing that the London award was procured by Jennings’ dishonest evidence and because of errors in the way the arbitrator handled the case. He has however not explained why he did not challenge the arbitration ruling in London within the stipulated period, saying he could not discuss his strategy in public. Nyagah sounded too shocked by prospect of losing his bank accounts and has not commented on the matter.
“They are crooks. They thought foreigners come here, panic when things get tough and they pay up or run away. They thought we would be like any other foreign investor: panic, pay up or leave.We have fought them instead, and they didn’t expect that,” he said.
“They tried to use the immigration to scare us away. That backfired because we are not in breach of any immigration law. They have used the Directorate of Criminal Investigations to try to sanitise their criminal activities, unfortunately, their crimes stink to the high heavens; they tried to assassinate our lawyer Ahmednassir Abdullahi, he escaped the dragnet by God’s mercy; recently, they petitioned parliament to frustrate our investment: that petition is now dead; they have used a forged letter to wage a smear campaign that we don’t pay taxes, KRA has disowned their fraud. We were going slow on them in our pursuit of the court award, now they must pay up or lose in other ways. Enough is enough,” a furious Jennings is quoted to have told a cocktail party at a Westlands hotel.
The frustrations against the Tatu project come amid international reports that Kenya has moved up 19 places to position 61 in the World Bank ease of doing business report, and ranked the 7th most improved globally. The involvement of and use of government agencies to frustrate foreign investments should be a concern to Uhuru Kenyatta as he struggles to leave behind a legacy of development.