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How Diamond Lalji became a bankrupt millionaire

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Picture this: Your friend asks you to guarantee his/her sacco loan. You automatically agree because you know him/her well. Besides, the sacco is known to be flexible with defaulters.

Sadly, things don’t go according to plan, life gets tough and your friend defaults. But his/her assets are not enough to recover the loan, so the sacco comes after you and other guarantors.

PETITION

Unfortunately, you can’t pay up, so the sacco files a bankruptcy petition against you and succeeds.

Within no time, you’re declared flat broke and an insolvency practitioner appointed to run whatever little exists of your estate.

This scenario is now real for thousands of Kenyans following a court judgement that declared former Cereal Millers Association chairman Diamond Hasham Lalji bankrupt on March 1.

The tycoon, whose business empire boasts no fewer than 16 companies in various industries, failed to repay a $4.8 million (Sh480 million) debt three of his companies owed American grain bulk handler, Cargill.

On January 16, 2017, Mr Lalji agreed to guarantee three of his flour milling companies — Premier Flour Mills, Maize Milling Company and Milling Corporation of Kenya — which had owed Cargill since it supplied them with maize in 2012.

At the time, the three firms owed $5.2 million (Sh520 million). Milling Corporation owed Sh274.95 million, Premier Flour Mills Sh192.25 million and Maize Milling Sh48.95 million.

But after the businessman failed to pay up as agreed, Cargill filed an insolvency petition against him.

TITLE DEEDS

Mr Lalji on Friday filed an appeal against the bankruptcy order issued by Justice Francis Tuiyott.

The Court of Appeal will mention the case Monday and decide whether to suspend Justice Tuiyott’s order, as Mr Lalji looks to convince the appellate judges to dismiss the order permanently. Justice Tuiyott’s ruling is likely to create anxiety among loan guarantors, since they could meet a fate similar to Mr Lalji’s.

Justice Tuiyott ordered that Anthony Makenzi Muthui of Ernst & Young take the over management of Mr Lalji’s estate as a receiver manager to recover Cargill’s debt.

Usually, the appointment of a statutory manager to handle a bankrupt individual’s estate is left to the official receiver. But Justice Tuiyott held that the official receiver had accepted Cargill’s nomination of Mr Muthusi, and that Mr Lalji did not contest the arrangement.

Justice Tuiyott agreed with Cargill’s argument that Mr Lalji did not give adequate details on six parcels of land worth Sh330 million that he offered to sell to offset part of Cargill’s debt. The businessman faulted Cargill for turning down his repayment proposal, which included the six title deeds as security.

DISCLOSURE

He also asked Justice Tuiyott to consider that his three firms had repaid Sh34 million since the insolvency petition was filed. But Cargill insisted that the Sh30 million was too little, since Mr Lalji had promised to pay Sh100 million.

Justice Tuiyott ruled that there was no evidence to verify the value of the land Mr Lalji pledged as security. “The identity of the properties to be sold is not disclosed and neither is a professional opinion of the value demonstrated. In the circumstances, a creditor would be rightly entitled to doubt the credibility of the proposal made.”

The court added that Mr Lalji’s failure to make a disclosure of all his assets and liabilities did not help his argument, because it is only upon such disclosure that the court can evaluate his ability to meet the offer. “And it cannot be ignored that the promise to pay the debt is by the very companies whose default led to the guarantee that has given rise to Mr Lalji’s apparent insolvency” Justice Tuiyott ruled.

Justice Tuiyott had ruled that Cargill was not unreasonable in turning down a repayment proposal by Mr Laji, which would have seen the debt repaid in instalments running through to April, 2023. After Cargill filed the insolvency petition, Mr Lalji proposed to give the firm the six pieces of land, which he was ready to sell, as security.

source:nation.co.ke

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City detectives turn probe on G4S to unravel bank’s Sh14m ATM robbery

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No bullet was fired, no machines were broken into but Sh14 million was gone. As the puzzle of the Barclays Bank ATM theft deepens investigators have narrowed the analysis on two probabilities.

The robbers who stole millions of shillings from four ATMs belonging to Barclays Bank during the Easter holiday were so clever that they chose off-site machines, which would have taken time for the bank to discover that money had been stolen.

This comes as an initial forensic analysis of the four affected ATMs on Tuesday raised the amount of money stolen to Sh14 million from the initial Sh11 million.

This is after it emerged that the Kenya Cinema ATM lost Sh3 million during the heist. The other three ATMs lost a total of Sh11 million.

HIGH TRAFFIC AREAS

Offsite ATMs are not hosted next to or inside banking halls. They are located in high traffic areas where banks think they have a clientele base that would make financial sense.

On Tuesday, police turned their attention to G4S, the security group contracted to man the four ATMs, in order to understand how the money disappeared.

It is said the bank’s internal security unit, on being questioned by the police, attempted to absolve themselves from blame by saying all the ATMs that were robbed were under the jurisdiction and management of G4S.

They were, however, hard pressed to explain why the bank had not installed CCTV cameras at the Mutindwa ATM, an oversight that is likely to place the financial institution in trouble with its customers.

By Tuesday, detectives from the Cyber Crimes Unit at the Directorate of Criminal Investigations (DCI), who have taken over the investigations, had narrowed down to two theories on how the cash was stolen within three days.

“I can’t comment on an ongoing investigation, which has been taken over by another unit. All I can say is, investigations are ongoing,” Nairobi police boss Rueben Ndolo told the Nation.

However, a physical investigation on the ATMs showed that apart from the Kenyatta National Hospital (KNH) ATM, the rest had not been tampered with.

PHYSICAL TAMPERING

The ATMs at Mutindwa, Mater Hospital and Kenya Cinema were found to be in good condition with no evidence whatsoever of any physical tampering.

This has led detectives to believe that the ATMs might have been hacked into, by a cyber-crime ring that has become a headache to banking systems of late.

In order to evade detection, the robbers chose to strike during a holiday when there was very little movement of people.

Additionally, they chose to strike just after two of the ATMs had been reloaded with cash. This has heightened suspicion that someone on the inside must have tipped them off. On-site ATMs, which are located at banking halls, are loaded directly by the bank.

MONITORS CASH LEVEL

However, off-site ATMs, like the ones that were robbed, are loaded by the security company contracted to man them. The security company monitors the cash level inside the machine on a daily basis and then requests for money or technical assistance from the bank whenever required.

In case an off-site ATM needs to be reloaded, all the security company does is to make a requisition and then go pick the money. Like a day before the ATM at Mutindwa was robbed, G4S personnel had just loaded it with Sh7 million. Out of this, Sh6.2 million was discovered missing 24 hours later.

The bank has, however, declined to say how much money was in the four ATMs at the time of the robbery.

source:nairobinews

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Kenya Airports Authority responds to Sonko’s JKIA toilet rant

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The Kenya Airports Authority (KAA), has explained why toilet facilities at the Jomo Kenyatta International Airport (JKIA) are in a poor condition.

This after Nairobi Governor Mike Sonko, who arrived in Nairobi on Thursday morning from London, ranted on social media about the pathetic state of the facility’s washroom.

A statement shared on their Twitter handle, KAA said that the washrooms at the airport are the way they are due to vandalism which is currently being experienced at the airport.

VANDALISM

They also said they have commissioned a contractor who is on the ground and is systematically repairing and replacing the faulty equipment.

“Our attention has been drawn to concerns on social media relating the washrooms at JKIA. These cases are as a result of vandalism which we are unfortunately experiencing at the airport,” KAA’s statement read.

“We currently have a contractor on the ground who is systematically repairing and replacing the defective equipment. We apologize for any inconvenience caused but assure all airport users that we strive for customer satisfaction,” the statement further read.

HARSH CRITICISM 

KAA came under harsh criticism from Kenyans after Mr Sonko shared a video capturing the urinal in the men’s washroom with exposed cables with no appropriate water flashing mechanism.

Mr Sonko vented on how he had to connect two wires that were visible from the area that is supposed to have the flush button, for water to come out.

He also claimed that he was electrocuted while answering a short call in the toilets.

source:nairobinews

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City residents adopt carpooling concept to beat jams, steep fares

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This informal means of transport has its downsides, but is useful for many in Nairobi

Would you share a private car with a stranger headed in the same direction and share the costs instead of taking a taxi or matatu? Well, it seems some Nairobi residents are increasingly adopting carpooling to save themselves from the high cost and bad driving habits of matatu drivers.

At Car Wash, a sprawling middle-class neighbourhood in Kasarani, residents share a ride every morning, saving money and time spent in traffic, and arriving at work in style and more comfortably.

They are also escaping a desperate situation: the dire lack of public service vehicles (PSVs). The few that ply this route often leave them stranded on the busy highway with no connecting vehicles into the estate.

Car Wash estate is located between the Roysambu and Githurai 45 neighbourhoods, on the outskirts of Nairobi.

Isolated between two major highway exit points, the area has no dedicated PSVs and so residents created a carpooling scheme.

Carwash residents board private cars as several private cars line up to pick commuters on the way to town.

Ms Judy Mugo is a resident of Kasarani. She lives at a place called Seasons, which is closer to Mwiki Road than it is to Thika Road.

Late for work

For her commute to town, where she works as a customer care agent with a bank, she opts to walk hundreds of metres to Car Wash. Her aim? To ride-share with the residents there.

“Before carpooling, I used to be seated in a matatu at 5.30am. Then I would arrive in town very early and idle around waiting for the bank to open,” says Ms Mugo.

But if Ms Mugo decided to leave her house late, she would always get to town late for work.

“It takes more than an hour to access town via public means and you pay Sh80 while it takes me a maximum of forty minutes in a private car and I pay Sh50.”

Victor Mwaura, a young businessman based in Ngara, has also ditched matatus and depends solely on carpooling rides to get to work.

Private car owners who spoke to the Sunday Nation said the motivation behind ride-sharing is simply to help distraught residents.

“I live in Kahawa Sukari. I decided to start sharing my car when I saw the number of people stranded by the roadside,” says Timothy Odhiambo, who often stops to pick up residents on his way to town.

It has been one year since he started sharing his car with Car Wash residents.

“I pick up passengers daily on my way to town for business. I do it out of kindness,” Mr Odhiambo insists, “The Sh50 they pay as fare does not make much financial sense to me.”

His sentiments are shared by Stephen Njenga, a businessman based in Westlands, who picks up passengers at least thrice a week, depending on his schedule.

Carwash residents board private cars as several private cars line up to pick commuters on the way to town.

The ride-sharing concept here is disorganised as passengers scramble for cars. This puts off some drivers, who drive off never to stop again.

Mr Odhiambo claims to have stopped picking up passengers for some time after losing his side mirror in the scramble.

Ms Mugo wishes passengers would queue up to board.

Ride-sharing is widespread in the US and western countries but it is still a relatively new concept in Kenya.

“The concept here is informal but is more common upcountry, where a person going to the city will stop at the matatu stage and pick up a passenger or two,” says Ms Kellie Murungi, senior consultant at Lattice Consulting, a boutique finance and strategy advisory firm.

But the Car Wash example perhaps points to a country that is ripe for organised carpooling.

Former Kiambu County executive committee member for transport Nancy Njeri, now the transport planning manager at the Institute for Transportation and Development Policy, said carpooling is a good concept that the government should promote and encourage.

source:Sunday Nation

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