Former Kenyan Foreign Affairs Minister Raphael Tuju has broken down the circumstances surrounding his long-running financial dispute with the East African Development Bank, insisting that the case stems from a breach of contract after part of an approved loan was never released.
Tuju has come out to claim that the financing arrangement was structured around a development project and not simply the purchase of land.
“I didn’t take a loan from the bank to buy a piece of property. I took a loan from the bank to do a project,” Tuju claimed.
He noted that banks generally require proof of repayment capacity before approving loans for land purchases.
“The bank, even as a financial institution, will not give you a loan to buy a piece of land unless you can demonstrate how you’re going to pay,” he said.
Tuju’sProject Evaluation and Loan Approval
According to Tuju, the bank approved the loan after extensive financial evaluation and independent verification of the project’s viability.
“So, the loan was given against a project document. This project document was evaluated by the bank. In fact, for that evaluation and loan, I paid 4.7 million shillings, that time about 50,000 US dollars,” he said.
He added that global consulting firm KPMG was also brought in to independently assess the project.
“Then they brought in KPMG, who also had to be paid about 2 million shillings to test the project in terms of viability. KPMG submitted a report that the project is viable,” Tuju said.
Following the evaluations, the proposal was presented to the bank’s board.
“Then it went to their board and they approved it. They approved 1.2 billion shillings,” he stated.
Loan Disbursement Dispute
Tuju said the approved loan was structured so that Sh900 million would go toward purchasing land while Sh300 million would finance development of the project.
He explained that he was also investing personal funds of around 100 million into the venture.
However, he claims the bank only released the funds for the land purchase.
“They paid the vendor the 900 million and refused to disburse the 300 million,” he said.
According to Tuju, the withheld funds made it impossible to proceed with the project.
Claims of Pressure and Blackmail
Tuju further alleged that the refusal to release the remaining funds was accompanied by pressure from individuals who wanted a stake in the project.
“The reason why I’m not getting the 300 million is because, meanwhile on the side, they’re blackmailing me,” he claimed.
“Guys want to be part of the project. I said I’m not biting,” he said.
Tuju insisted that evidence supporting his claims was presented during court proceedings.
Tuju said he attempted several times to resolve the dispute, including seeking refinancing support from Kenya Commercial Bank.
However, he claims the East African Development Bank declined the proposal.
Tuju also sought assistance from friends in the United Arab Emirates to settle the loan.
According to Tuju, negotiations continued but the settlement terms kept changing.
“We agreed to pay the 12 million so that I can move on. But after drafting the settlement agreement, they came back and said the board had rejected it and now the amount was 16 million,” he claimed.
Despite the ongoing court battle, Tuju maintains that the 900 million shillings was paid to the vendor and the 300 million that was supposed to go to the project remained with the bank.
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