Receivers In TransCentury Sh6B KRA Tax Arrears Are Biased And Must Be Removed, COFEK Claims

A bombshell court filing has ignited fresh controversy at the heart of the most protracted corporate insolvency battle in Kenya’s recent history.

The Consumer Federation of Kenya, better known as COFEK, has gone before the Commercial High Court demanding the removal of two PricewaterhouseCoopers liquidators managing the affairs of infrastructure holding group TransCentury PLC, alleging that the pair has conducted the receivership in a manner so nakedly partial to Equity Bank that the interests of the Kenyan public, specifically billions of shillings in outstanding tax obligations, have been deliberately relegated.

The two men in the crosshairs are George Weru and Muniu Thoithi, senior PwC Kenya partners who were first appointed by Equity Bank as joint receivers and managers of TransCentury on June 16, 2023, and as joint administrators of its subsidiary, East African Cables, on the same date.

Their mandate, which has survived multiple rounds of litigation and no fewer than three High Court injunctions, covers the recovery of what Equity Bank now puts at a staggering Sh6 billion in accumulated principal, accrued interest and penalties arising from credit facilities extended to the TransCentury group over several years.

“The quantum, magnitude and persistent non-discharge of these statutory obligations place beyond any doubt the fact that these are not mere private commercial claims, but monies owed to the State for the benefit of the Kenyan public.” – COFEK court papers

Kenya Insights has reviewed the court papers filed by COFEK, whose secretary general, Stephen Mutoro, is the organisation’s most visible face in the litigation. COFEK has also listed the Kenya Revenue Authority, the National Assembly and the Attorney General as interested parties in its suit, alongside Equity Bank and the National Taxpayers Association.

The breadth of that party list is itself a declaration of intent: COFEK is arguing that the receivership, far from being a private commercial affair between a bank and a defaulting borrower, has taken on enormous public interest dimensions because TransCentury and its subsidiaries owe the taxman Sh1.6 billion that the receivers have allegedly failed to aggressively pursue.

THE ANATOMY OF THE BIAS ALLEGATION

The centrepiece of COFEK’s case is a legal argument that cuts to the very nature of what a receiver manager is in Kenyan law.

Under the Insolvency Act and the broader common law tradition that governs receivership conduct in this jurisdiction, a receiver is not a mere agent of the appointing creditor.

The receiver owes duties not only to the secured creditor who appoints them but to the company in receivership, to preferential creditors, to employees, and to the public interest.

It is this multi-directional duty that COFEK says Weru and Thoithi have quietly but unmistakably abandoned.

The lobby’s papers allege that the two receiver managers have, by reason of the circumstances of their appointment and the manner in which they have conducted the receivership, demonstrated a clear and apparent bias in favour of Equity Bank as the first interested party.

COFEK further argues that Weru and Thoithi have failed in their duties as quasi-officers of the court to discharge their mandate with the degree of impartiality, independence and fairness required by law.

The lobby accuses the pair of conducting the process in a manner calculated to maximise Equity Bank’s recovery while systematically deprioritising the State’s competing claims.

The KRA angle is where the COFEK case becomes particularly explosive.

The lobby accuses the revenue authority itself of failing to aggressively pursue the Sh1.6 billion that TransCentury and its subsidiaries are said to owe the public purse.

In a country where KRA has been deploying forensic banking data, satellite imagery and artificial intelligence to chase informal traders over a few hundred thousand shillings in tax, the allegation that a Sh1.6 billion corporate tax debt has been allowed to fester while a bank recovers its private loan carries heavy political symbolism.

THREE YEARS OF LEGAL WARFARE

To understand how Kenya arrived at this juncture, one must trace the slow unravelling of TransCentury’s finances.

The group, once celebrated as the archetype of a pan-African infrastructure champion anchored in Nairobi’s storied business elite, had by 2022 accumulated total debt exposures estimated at Sh9.6 billion across its three main operating units.

Equity Bank’s exposure, through debentures covering TransCentury’s core operations, was the largest single creditor position.

The trigger was a disastrous rights issue. TransCentury sought Sh2 billion from shareholders to partly service the Equity Bank debt.

The market demurred.

The company raised only Sh828 million, a subscription rate of barely 40 per cent, and even then offered the bank only Sh108 million out of the proceeds while requesting Equity to write off over Sh2.8 billion.

Equity Bank declined and moved to appoint receivers on June 16, 2023.

TransCentury fought back immediately, obtaining an emergency injunction from Justice Alfred Mabeya the following day.

Mabeya’s order, finding that the bank had jumped the gun while negotiations were still active and that premature receivership would cause irreparable harm to employees, customers and the broader economy, temporarily suspended the appointment.

What followed was nearly three years of rolling litigation that saw the company obtain and then lose injunctions, approach overseas refinanciers including a Cayman Islands-registered entity called TLG Africa Growth Impact Fund, and ultimately fail to secure the refinancing it promised the court.

Equity Bank’s own lawyers told the court that the outstanding debt had ballooned to Sh5.5 billion by January 7, 2025, a figure that the company’s own lawyers disputed as inflated and miscalculated.

The receivership was finally reinstated in June 2025 after a 90-day extension of court orders expired and TransCentury could demonstrate no credible refinancing.

PricewaterhouseCoopers issued a formal public notice confirming that Weru and Thoithi had reassumed full control of the company’s assets and affairs, stripping the board of directors of all powers of management.

The administrators simultaneously opened a window for potential investors to recapitalise, refinance or acquire key subsidiaries, particularly AEA Limited, the group’s engineering and infrastructure arm with a presence across Uganda, Tanzania, Kenya and Rwanda.

THE SEPARATE BATTLE OVER DUE PROCESS

Running parallel to the receivership management dispute is a separate suit in which TransCentury itself has consistently argued that the entire receivership is procedurally tainted.

Through its long-standing advocate Philip Nyachoti, the company has maintained from the outset that Equity Bank moved to appoint receivers on the very day it issued a demand notice, depriving TransCentury of the time required by law to respond.

Nyachoti argued in submissions that the bank failed to calculate the correct balance owed, demanding Sh6 billion when the actual figure, accounting for the Sh1.7 billion the company had already repaid, was materially lower.

TransCentury also filed a separate case alleging that Equity Bank illegally occupied its premises and appointed the receiver managers without due process, taking over the physical offices before any legal authority for such action had crystallised.

The company’s chairman, Shaka Kariuki, described the bank’s actions as an ill-intended process that blindsided a partner with whom the company believed it was in productive dialogue the day before the receivership notice was executed.

Equity Bank’s senior counsel Kiragu Kimani countered in court that the company had approached with bad faith by concealing from the court that it had already acknowledged all the debts in private correspondence and had pleaded for a 90-day grace period during negotiations.

Kimani argued that the bank could not indefinitely allow interest to accumulate on a deteriorating loan book while the borrower deployed litigation tactics to delay the inevitable.

PUBLIC INTEREST VERSUS PRIVATE RECOVERY

COFEK’s intervention shifts the battleground entirely. Where the litigation between TransCentury and Equity Bank has largely been a private commercial duel, the consumer federation’s case injects the State as a competing creditor whose interests it argues are being illegitimately subordinated.

Privately appointed receivers are placed in a position of statutory authority.

They are officers of the court in a functional if not formal sense, and the courts have consistently held that their conduct must reflect that obligation.

The federation argues that a privately instructed receiver manager, appointed at the behest of a commercial bank and in circumstances where there are unresolved tax claims by the State, allegations of bias and professional conduct concerns, does not adequately serve the public interest.

COFEK has told the court that Weru and Thoithi cannot lawfully be relegated beneath the claims of the first interested party, Equity Bank, in the course of the receivership, and that their continued appointment is an affront to the principle that public debts to the State are not merely private commercial claims to be extinguished or deferred at the convenience of a secured creditor.

COFEK is asking the court to declare that the conduct of the receivership has been so systemically partial as to amount to a breach of the receivers’ statutory and common law duties, and to order their removal and replacement with independent office holders.

The case also lands at an uncomfortable moment for KRA.

The authority has in recent months launched an aggressive digital enforcement campaign, deploying automated systems that cross-check tax declarations against electronic invoices and bank records in real time.

It has pursued hotel owners in Naivasha over unexplained M-Pesa deposits and threatened businesses over minor invoice mismatches.

The allegation that it has simultaneously allowed Sh1.6 billion in corporate tax arrears from a high-profile receivership to remain uncollected will invite pointed questions from parliamentarians and civil society.

The case is filed at the Commercial High Court in Nairobi and is expected to be assigned to the division handling TransCentury’s existing disputes.

The attorneys general and KRA, as interested parties, will be required to respond, potentially forcing the revenue authority to publicly account for the state of its enforcement against the receivership estate.

Weru and Thoithi, through their principals at PwC, have not yet filed a formal response to the COFEK application as of press time.

Legal analysts who have followed the TransCentury saga say COFEK’s intervention, while novel, is not without legal foundation.

The courts have in previous rulings acknowledged that receivership is not merely a debt recovery tool for the appointing creditor but carries obligations to the broader creditor hierarchy, including preferential creditors.

Whether the Commercial High Court will extend that principle to hold that KRA’s claims impose a positive obligation on receivers to aggressively pursue tax collection on behalf of the State is a question that Kenya’s insolvency jurisprudence has not squarely addressed.

What is beyond dispute is that the TransCentury receivership, now entering its fourth year of contested administration, shows no signs of resolution. The PwC administrators are actively marketing key subsidiaries to investors, but no binding transaction has been announced.

The debt, initially put at Sh4.8 billion, has under the accrual of interest reportedly grown to figures north of Sh6 billion.

And now, with COFEK adding a new front to the litigation, the prospect of any clean exit from the receivership is receding further into a Nairobi judicial calendar already straining under the weight of the dispute.

For TransCentury’s thousands of shareholders, employees and creditors, the entry of a consumer lobby group into what was already a three-party courtroom war is either a welcome reinforcement of accountability or one more complication in an already exhausting process.

For COFEK’s Mutoro, the answer is simple: the Kenyan public is a creditor too, and it is long past time someone in that courtroom said so.