The country’s largest retail chain, Naivas, is at the centre of a fresh court battle pitting siblings against each other.
Newton Kagiri Mukuha moved to court to challenge a previous High Court ruling that found he had no stake in Naivas. The battle comes a year after a minority stake in Naivas worth Ksh6 Billion was sold to a consortium that includes the International Finance Corporation (IFC), private equity firms Amethis and MCB Equity Fund and German sovereign wealth fund DEG.
Mukuha wants his younger brother David Kimani ousted as Naivas CEO, a seat on the company’s board, a 20% stake and an additional 20% stake from his late father’s share of the company. Mukuha is the eldest of three brothers who have since 2012 been locked in a battle for control of the firm.
Mukuha also wanted the Ksh6 Billion paid by the consortium of investors deposited in an interest-earning joint account, and for the court to freeze further sales of Naivas shares.
The three-judge Appelate Court bench composed of David Musinga, Hannah Okwengu and Asike Makhanda agreed to freeze further share sales but failed to issue orders on the rest of Mukuha’s petitions.
“In the meantime, the status quo in so far as the shares in dispute are concerned be maintained pending hearing and determination of the appeal,” they noted.
Court proceedings in 2012 had uncovered the family dynamics behind the Naivas empire. Mukuha had moved to court to stop the reported sale of Naivas to South African chain Massmart, with the deal eventually falling through. He also wanted a piece of the business arguing that he had contributed seed capital.
The High Court, however, found that Naivas had ceased to be a family business on October 31, 1999, the day the late patriarch shared family assets among his children partly in a bid to end disputes.
At the time, he had established and grown Rongai Self-Service Store which had three supermarkets in Elburgon, Rongai and Naivasha. Newton Kagiri was handed the Rongai store and a house.
His brother David Kimani and sister Linet Wairimu were given control of the Naivasha business while his other brother Simon Gachwe and sister, Grace Wambui, were given a house and the Elburgon store. Eventually, Kimani and Gachwe teamed up and grew what became Naivas.
The brothers offered their two sisters a 15 percent stake each in Naivas and a 20 percent stake to their father. Kimani and Gachwe each held a 25 percent stake each in Naivas.
“Clearly, the objector (Kagiri) has no interest, legal or equitable share, in Naivas Limited,” Justice Emukule ruled at the time, asserting that he could only lay claim to the 20% stake allocated to his father.
The Ksh6 billion minority stake sale to the consortium was notably meant to fund expansion by the retail chain.