Residential Projects

How Bishop Yego’s Real Estate Dream Became a Nightmare

Court declines to stop sale of Bishop Silas Yego’s city property.

Updated on

July 7, 2020

Retired African Inland Church Bishop Silas Yego is facing auctioneers after the High Court declined to stop the auction of his Nairobi property to recover Sh140 million owed by him.

Bishop Yego, through his company Siro Investments, had 2014 applied for and received a Sh140 million loan from Transnational Bank to build 50 apartments in Kileleshwa.

The loan, which was secured on 7th November 2014, has become a constant source of anguish for the patriarch who is now on the verge of losing his property.

In a court battle seeking to stop the bank from auctioning his property, Bishop Yego said his project fell into problems caused by third parties and arbitration proceedings were initiated and ruled in his favour.

The problems saw the bishop falling into arrears in the repayment of the debt, prompting him to approach the bank in February last year with a new proposal on the repayments.

By then, the bank indicated that the amount owed was Sh116 million.

“He had made efforts to clear the loan payments amounting to Sh34 million within the last few months, with the last instalment being made in January 2020,” read court documents.

Between January and November 2019, Bishop Yego paid Sh32.65 million. In January this year, he paid Sh996,800. The repayments, he said, cut the debt to Sh82.35 million.

In April, Transnational Bank instructed Purple Royal Auctioneers to auction the Kileleshwa property to recover Sh143.63 million supposed to be the loan balance as of March 31, 2020.

Bishop Yego moved to court to stop the auction saying the bank had undervalued his property and that the debt was Sh86 million and not the Sh143 million quoted by the bank.

In its argument, Transnational Bank said it had extended sympathy to the bishop on several occasions to the point of agreeing to a discount on the loan interest.

“He requested the bank to indulge him as he was in the process of disposing of another property to enable him to repay the loan subject to being granted a discount on the interest,” the bank said in court.

“By a letter dated 7th February 2019, the Plaintiff once again indicated that he would pay Sh116 million in four instalments. The Bank (said) it would accept the offer on condition that the source of repayment would be disclosed and that the loan would be cleared within 90 days with all instalments being paid on indicated dates without default and the last instalment being received on May 21, 2019.”

The bank further indicated that if the terms were not met, the full debt outstanding on May 21, 2019, should be paid without any interest waiver.

“After failing to meet the conditions imposed by the Bank, he approached the Bank for renegotiation. The Bank informed him by a letter dated 6th February 2020 that it would accept a settlement if he paid Sh89.20 million within 30 days of the letter,” the bank added.

On February 20, 2020, the bank rescinded its offer and the loan reverted to Sh141.30 million.

Bishop Yego told the court that he informed the bank that he had entered into a deal with one Peter Kivolonzi who was to buy the suit property for Sh200 million, part of which would be used to clear the outstanding loan.

The first instalment from the sale, the bishop said, was due on April 30, 2020, but the outbreak of the Covid-19 pandemic stalled the process of the private sale.

But in his ruling on June 30, Justice David Shikomera Majanja declined to stop the auction of the property saying the bishop understood that the bank was entitled to seizure and auction of property upon default.

“The plaintiff has been in default since 2019. He has not met promise to settle the debt despite several offers by the bank to accept a settlement,” Justice Majanja said.