Ali Punjani
Ali Punjani's property sitting on 0.4 acres in Bondeni neighbourhood of old Nyali registered to Shrike Investments Limited G/T Rising Star Commodities can barely settle his Kes 6 billion NBK debt.

Kenya Commercial Bank is trying to clean up National Bank of Kenya’s books auctioning loan defaulters who have over the years been gaming the lender by hiding behind top executives and political links.

Gross non-performing loans at NBK rose from Kes 2.2 billion in 2012 spiraling under former managers to close at Kes 26.3 billion as of March 2021.

NBK needs to recover some of the bad loans that had crippled the lender forcing the government to merge the bank with KCB in 2019.

Since KCB Group acquired NBK it has changed top managers and stepped up the hunt for loan delinquents to help clean up a legacy of bad debts that have been chocking it over the years.

It recently put Mombasa tycoon Ali Punjani’s palatial Nyali home up for auction over Kes 6 billion debt.

The house stands on a property valued at about Sh1 billion plus the eight bedroom all ensuite, double storey mansion with staff quarters, a swimming pool and a changing room block.

This means the property sitting on 0.4 acres in Bondeni neighbourhood of old Nyali registered to Shrike Investments Limited G/T Rising Star Commodities can barely settle the loan.

The loan default has exposed the risky nature of some of the people who owed NBK large sums of money with Punjani having been linked to the Akasha brothers–Baktash and Ibrahim–convicted in New York for running a drugs network in East Africa, Afghanistan, Europe and US.

Read also: Why you should inquire in detail about the state of your loan

A court case by the lender’s Associate Relationship Manager Edwin Kipchumba revealed that Punjani’s firm had backroom channels that helped him receive millions from the bank.

Mr Kipchumba wanted to be reinstated after he alleged he was forced to resign following an audit by Deloitte & Touché that revealed there was misrepresentation of the bank’s non-performing loans.

He said in court papers Rising Star Commodities Limited was credited Kes 580. 6 million by NBK on December 31, 2015. It was debited the same amount, on the same date. The sum was shown as a new loan. This is known as rebooting in banking parlance.

He was also embroiled in the Juja and TSS Accounts where Nairobi officials sent email instructions to freeze interest charges despite the late Mombasa tycoon Tahir Sheikh Said-TSS having exceeded credit limits.

The TSS Company took two overdraft facilities, pre-shipment and post-shipment facilities with NBK in 2013 and 2016 that were secured by the land as well as other securities but stopped making payments in 2015.

NBK tried to sell the property but was stopped in April 2017 by the late Mombasa tycoon’s son Tauhida Tahir Said who has fought four years in court to stop the auction.

It is only recently that NBK have been able to pursue the over a Sh3.7 billion TSS loan after Court of Appeal cleared the lender to auction.

A three judge bench has ruled that Juja Coffee Exporters Limited admitted to taking the loan and a dispute over the amount did not warrant a stay on auctioning the property.

As NBK steps up the chase for loan defaulters it is set to open a can of worms linking previous managements who helped create the suspect deals and helped rogue borrowers avoid repaying the lender.

But it may also get grossly undervalued assets used to procure huge loans which cannot compensate for the damage.

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