The Cout of Appeal has ordered the National Bank of Kenya (NBK) to pay former MP Basil Criticos Ksh2.28 billion for auctioning his sisal farm in 2007.
A three-judge bench found that the 15,994.5 acre farm in Taita Taveta was undervalued given that there were buildings, sisal, quarry, and road network on the land.
The auction was conducted in a bid to recover a Ksh20 million loan advanced to Agro Development Company in 1991, where Mr Criticos was a shareholder and a guarantor of the loan. The land was sold to Settlement Fund Trustees (SFT) for Ksh55 million.
“In the result, subject to what we shall shortly state with regard to the crops, we find the appellant’s valuation report to be solid in content and uncontroverted. It was not to be merely wished away. And we are on balance persuaded by the appellant’s contention that the suit property was sold at an undervalue,” Justices Roselyn Nambuye, Wanjiru Karanja and Patrick Kiage said.
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NBK has also been ordered to refund Mr Criticos Ksh35 million, which was the surplus from the sale.
The court also found that the former Taveta MP was charged excess interest rates, and the bank was unreasonable by denying him the opportunity to redeem the loan. The bank was also at fault for selling the property at less than the amount he offered, Ksh63 million.
“Our foregoing analysis leads to the inescapable conclusion that the appellant was treated by the respondents in a shabby and wholly unacceptable, if not tyrannous, the manner in the entire transaction,” the judges said.
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As of 1997, the loan had accumulated to about Ksh66.5 million plus interest of 35 percent per month. He was given three months to repay the amount, but his efforts to sell the land and offset the loan were frustrated by several court cases.
After selling the land to SFT through a private treaty while the case was ongoing, NBK still demanded Ksh106 million from Mr Criticos.
“While we note that the charge had a condition granting the respondents the exclusive right to vary the rate of interest at any time without advising the chargee, we find it unconscionable and morally wrong that the bank would raise the interest rate from 19 percent per annum to the impossibly high rate of 35 percent per month, amounting to 420 percent per annum,” the judges said.
The Ksh2.28 billion award is more than the Ksh1 billion profit NBK made in the year ended December 2021.
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