Banks Start the Crackdown of Sh3.6bn Assets Linked With Ex Nakumatt CEO

After the Tuesday vote to dissolve Nakumatt Holdings, Banks are now in a quest to identify properties and bank accounts, which includes assets from third parties who acted at guarantors to Nakumatt’s multi-billion shilling debt linked to Mr. Shah, the former Nakumatt Chief Executive Officer, with the intent to recover billions of shillings that the retailer owes them.

According to a document issued by Pater Kahi, the appointed Nakumatt administrator, a Sh2 billion property in Nairobi owned by Collogne, Park View Shopping Arcade (Sh600 million), a Sh220 million plot in Westland under Nakumatt Investments, an office block valued at Sh350 million in Mombasa and River View Plaza, which is worth Sh200 million were among the properties linked to third parties and not directly to Nakumatt.

“The assets are linked to Atul Shah and other related entities such as Collogne Investment Limited, Nakumatt Investment Ltd, River View Plaza and Park View Shopping Arcade among others,” said Mr. Kahi.

In a review of the company’s financial statements, by the time it was placed under administration on January 22, 2018, Nakumatt Holdings had lent its directors more than Sh1 billion in interest-free soft loans.

The related party transactions were recently disclosed in a report for the year ended February 2018 by Parker Randall Eastern Africa, the retailer’s independent auditor. Although the auditor did not specify which individuals owed the company the money, Mr. Kahi said Nakumatt has only two directors — Mr. Shah and his son.

Mr. Kahi said Mr. Shah had acknowledged receiving the soft loans and informed the administrator that he had no cash, arguing he was distressed. “Ideally, the directors should have refunded the company this money, but they claimed not to have the money,” he said.

The administrator has written off Sh1.5 billion — or 53 percent of the receivables — leaving a balance of Sh1.3 billion.

The loans to the company’s directors are among a series of related party transactions amounting to Sh2.8 billion, which are unlikely to be recovered. Others include amounts claimed from subsidiaries in Uganda, Rwanda and Tanzania, which ceased operations.