How Jabavu Limited obtained Sh1.9billion loan using public land while fighting bankruptcy suit

The controversial real estate developer, Jabavu Village (K) Limited, a subsidiary of the Hass Petroleum Group charged a public title deed of Jevanjee affordable housing project measuring 8.9 acres and obtained a Sh1.9billion loan facility at a time the firm was fighting bankruptcy suit over Sh611million debt owed to Credit Bank Limited, The Informer Media Group can authoritatively reveal.

To fight the insolvency suit against Credit Bank, Jabavu which was reeling in a financial crisis listed expected Sh7.7billion proceeds from the Jeevanjee housing project projected safety net bounce back to financial stability.

To execute the housing project, Jabavu has on Ms. Zhongjiao Third Highway Engineering EA Company and have since signed a contract to effect the development.

Through a letter dated April 21, 2022 Credit Bank was demanding arrears of Sh800million (USD 6,803,485.51.) from Jabavu arising from a loan facility the bank advanced to Jabavu amounting to Sh632million (USD 5,273,332.22).

Credit Bank had sought to issue a statutory demand against Jabavu over Sh611million (USD 4,700,000) debt.

However, High Court Judge Lady Justice Freda Mugambi upheld application by Jabavu director Abdulkadir Ahmed Hussein to set aside the statutory demand issued by Credit Bank.

In the suit, Jabavu Village (K) Limited were the applicants while Credit Bank were the respondents.

“In conclusion therefore, I allow the notice of motion dated December 21, 2022 and set aside the statutory demand dated December 1, 2022. The respondents shall bear the costs of these proceedings.” Justice Mugambi ruled.

The fierce battle to fight off bankruptcy suit by financially distressed Jabavu played out concurrently with processing of a parallel loan using the Jevanjee public land title deed at National Bank of Kenya (NBK) on January 18, 2023.

According to a letter from National Bank dated January 18, 2023 in our possession, the public land in question, L.R No.209/5458 registered as Nairobi Bachelors Jevanjee Estate Limited was charged by Jabavu Village for Sh1.9billion.

The process of obtaining the Sh1.9billion at National Bank was initiated in December 2022 at a time the insolvency suit by Credit Bank against Jabavu Village was active but Nationak Bank completed processing the loan facility in May 2023.

The Sh1.9billion used as seed capital for the commercial development using public land as security by a private developer has raised questions of Jabavu’s cost of investment in the housing project whose units will be sold out to members of the public a cost of Sh7.7billion.

The Jevanjee Housing Project, formalized through a partnership between Nairobi City County and Jabavu Village in March 2019, established clear roles: the county would oversee development while Jabavu Village would handle construction.

Despite this structured arrangement, the project has encountered significant delays and legal obstacles.

Although the Nairobi County Assembly passed a motion to allow title deeds of the Nairobi Urban Renewal Projects, where the Pangani Affordable Housing Project falls, to be used as security by developers to access funding on April 19, 2023, a civil society group, Sheria na Watu, filed a case with the Environmental and Lands Court on May 10, 2023, against the Nairobi City County Government and the Nairobi City County Assembly arguing that the move by the latter is unconstitutional.

The court heard that the National Lands Commission (NLC) was never involved in the process yet it is the custodian of public land.

“It was contended that before the approval of the said resolution by the second Respondent, no authorization was obtained from the third respondent to offer the title of the intended Pangani Urban Renewal Project as collateral, for the benefit of the developers, who are private entities.” The judgment read in part.

Article 62 (2) of the Constitution states that public land shall vest in and be held by a county government in trust for the people resident in the county and shall be administered on their behalf by the National Lands Commission.

In what might further derail the already stalled project that is almost estimated to be 46 per cent done and the developer is expected to complete by 2026, the Nairobi City County Assembly has now written to the National Bank of to stop further transactions using the title deed for the Jevanjee housing project until the Sectorial Committee on Lands, housing, and Planning completes its investigations.

In a letter to the bank through the Assembly Clerk, the Assembly Planning Committee has summoned the NBK Managing Director George Odhiambo to appear before them and give details on how the said title deed was used to secure a loan at the bank.

The committee directed NBK to avail the copies of all the relevant documents that they relied upon to approve the loan about the affordable housing project.

“It has come to the attention of the Nairobi City County Assembly planning committee that the title deed for the parcel of land on which the Jevanjee affordable housing project is being implemented was presented to NBK to secure a loan to finance the said project. The committee has resolved that National Bank of Kenya stops any further transactions on the said title deed until the committee completes its investigations.” The letter by the Assembly Clerk reads in part.

“The Managing Director of NBK should appear before the committee on November 6, 2024, and furnish the committee with a report on whether the title deed was used to secure a loan, how much was advanced in the form of a loan, and for what purpose, the criteria under which the title deed was used to secure the loan and the copies of all the relevant documents relied on to secure and process the loan concerning the said project.” The letter adds.

According to the committee members, the project developers were to come with money to develop units on the county land and sell them to the public.

But five years later, after all the units were sold before development, there was no progress, and now the title deed was used to secure a loan against the urban renewal policy.

“A developer was supposed to come with money, the county with land, and the developer was to construct units and sell to the public. What is shocking is that the Jevanjee project where almost 1400 units were to be built was sold out within a month and on top of that, there is no progress five years later. They have again gone further against the urban renewal policy and used county property to secure a loan.” Former Planning Committee chair and Waithaka Member of County Assembly Anthony Kiragu, who now serves as the Minority Leader said.

Previously, Tecnofin had run out of cash saying they were facing financial changes from what they termed as the fast pace of the project.

An attempt through the Nairobi City County Assembly to facilitate access to funding failed to materialize after the court ruled against using the project’s title as security.

The development was to resume last month but the MCA’s said it is still stalled a month after the developer confirmed resumption.

According to the Jabavu Village website, Jabavu Village Limited (JVL) is the real estate investment arm of the Hass Petroleum Group, one of Africa’s leading oil and marketing companies. The Hass Petroleum Group’s flagship business is in the selling and distribution of petroleum products with its headquarters in Dubai.

Jabavu Village (K) Limited is owned by Abdinasir Ali Hassan, Abdulkadir Ahmed Hussein and Abdirashid Mohamad Jabane.

Hassan is the chairman of the board of Jabavu Village and chairman of the Hass Petroleum Group while Hussein is the Managing Director of Jabavu Village and a director of Hass Petroleum Group.