Cyrus Jirongo is a renowned politician who served as the party leader for the UDP Political party. The former Lugari Constituency Member of Parliament walked into a State-owned bank and acquired a Ksh 40 billion loan worth Kenya’s annual budget.
He then used the land as collateral and defaulted to repay the loan, but when the bank tries to auction the land to recoup its debt, it discovers that the government owns the land, and how he obtained its title deed remains a mystery. Here is the full story as told by the African Torch.
Earlier this month, the Ethics and Anti-Corruption Commission summoned Former National Assembly Speaker Kenneth Marende and Jubilee Party Vice Chairman David Murathe for questioning over millions received from Cyrus Jirongo. The incident led to the unravelling of Jirongo’s debt empire, which has left him owing the state Ksh 40 billion, as reported by Nation.
The Debt Empire
In 1993, Jirongo was among the prominent politicians in the country, having successfully chaired the Youth for Kanu 1992 (YK-92) campaign that saw President Moi getting re-elected to office. At the time, Kenya failed to meet the Ksh 45 billion budget for the 1993/1994 financial year and had to borrow Ksh 2.7 billion to fix the deficit.
At the same time, Jirongo walked to the state-owned Postbank and requested the same amount as a loan, which would be used in a National Society Security Fund (NSSF) real estate project and for personal use. The deal failed, but it was later uncovered that the land he used as collateral when applying for the loan was public property.
However, that was just the beginning for the shrewd politician. He registered several companies which began winning tenders with the government and borrowing loans from financial institutions. One of his companies, dubbed ‘Offshore Trading Company’, acquired a Ksh 1.1 billion loan from Postbank Credit and used a 1,000-acre piece of land in Ruai as collateral.
In 1994, another company, Sololo Outlets, took a Ksh 1.65 billion loan from the government-owned Postbank. He used a 2.5-acre piece of land in Mukuru Kwa Reuben as collateral. He, however, defaulted on both loans, which have accrued interest amounting to Ksh 40 billion.
According to court details filed by Kenya Deposit Insurance Corporation (KDIC) and seen by Nation, the first loan of Ksh 1.1 billion has accumulated interest worth over Ksh 20 billion. This is because, when the politician was acquiring the loans, the country had not passed the ‘in duplum’ rule, which prohibits the growth of interest rates above the loan amount.
Postbank would collapse in the late 1990s after more than Ksh 80 billion was borrowed by well-connected individuals who defaulted.
Postbank went into receivership, and the Deposit Protection Fund (DPF) was appointed as the receiver manager and liquidator. DPF has since been replaced by the Kenya Deposit Insurance Corporation (KDIC), tasked with recovering the unpaid loans and holding title deeds for the land used by Jirongo to acquire the loans.
However, efforts to recover the debt from the former Lugari MP have hit a wall after it was discovered that both the lands used are owned by the state. The Ruai land is owned by the Nairobi Water and Sewerage Company (NWSC). Nairobi County owns the Mukuru Kwa Reuben land and hosts AEF Reuben Primary School, a maternity clinic, a police station and a vocational Centre. However, the title deed is registered to Kuza Farms and Allied Limited, a company owned by Cyrus Jirongo.
How the politician was able to obtain the title deeds for the two lands remains a mystery that is yet to be uncovered. In 2014, the politician sued Nairobi County and the school claiming ownership of the 2.5-acre prime piece of land. Two years later, City Hall reached out in an out-of-court deal that saw the politician walk away with Ksh 250 million. He was then instructed to clear the loan for the title deed to be transferred from Postbank to City Hall.
He, however, didn’t clear the loan, and in 2019, he sued City Hall demanding the Ksh 250 million to be released. The high court judge dismissed the case and instructed the politician to clear the loan and ensure the title deed was transferred to City Hall. Despite the title deed not being transferred, City Hall released the Ksh 250 million to Jirongo.
Immediately after Jirongo received the money, he transferred it to various influential individuals, including former Jubilee Vice Chair David Murathe (Ksh 25 million), COTU Secretary General Francis Atwoli (Ksh 60 million), former Vihiga Senator George Khaniri (Ksh 5 million), former National Assembly Speaker Kenneth Marende (Ksh 3 Million) and Pan African MP representing South Sudan Albino Aboug (Ksh 38 million).
The payments to these influential individuals caught the eye of the Ethics and Anti-Corruption Commission (EACC), who summoned them to explain the motive for receiving the vast sums of money. Mr Murathe, Mr Atwoli and Mr Marende explained that Mr Jirongo was paying their debts and denied knowing any land dealings.