Embattled Businessman Naushad Merali Fight For Sh1B KDF Tender

The past doesn’t count when one goes for the paper, Naushad Merali a Nairobi businessman whose recent history has been clouded with fraud allegations, is battling it out with other big companies for the deal to build and operate 11,000 houses for the Kenya Defence Forces (KDF), with the promise of earning rent for 15 years.

The Ministry of Defence listed H.Young East Africa, a firm associated with Mr Merali and a consortium of three local companies – Zutari Kenya, Blink Studio and NorthWind Consulting- led by Centum Real Estate to battle for the projects to be spread across several KDF barracks.

The four join China Gezhouba Group Company Limited, China Railways Construction Engineering Group, China Civil Engineering Construction Corporation and China Railway Engineering Group Company Limited in the battle for the multibillion-shilling deal.

The project will be funded through Public Private Partnership (PPP) model with the KDF providing Sh1 billion for the first phase as the military targets to ease an accommodation shortfall especially for the non-commissioned officer cadre.

The private investors will rent out the houses to KDF for 15 years, allowing them to recoup their capital running into billions of shillings over the period after which the lease will terminate and revert ownership to the military.

Mr Merali is believed to own a stake in H.Young East Africa in addition to other businesses that include majority ownership in Sameer Africa that has interests in financial services, property and agriculture sectors.

The tycoon reduced his interests in the banking sector when he sold Spire Bank to Mwalimu National Sacco in 2016.

Kenyan lawmakers recently opened an investigation into the controversial sale of the troubled Spire Bank to Mwalimu National Sacco (MNS) in a deal estimated at over Ksh3 billion ($28 million).

Merali is accused of selling a shell bank to the teachers. The sacco board blamed the poor performance of the lender on business tycoon Naushad Merali who withdrew all of his deposits amounting to Ksh1.7 billion ($15.74 million) immediately after selling his shares in the bank.

The Senate Committee on Finance and Budget is investigating the transaction that has raised eyebrows in investment circles and is demanding an explanation from Central Bank on how teachers appeared to have been duped into putting money in an investment that has failed to generate profit in the last six years.

Facing a collapse that was cleverly orchestrated by Merali from the onset, CBK has agreed to bail out the teacher’s bank by injecting funds in recent update.

In 2019, top Kenyan lawyers called for the arrest of Sameer Africa’s chairman Naushad Merali for his involvement in a corruption case in which he was reportedly swindled millions of shillings.

The lawyers, Paul Muite and Ahmednasir Abdulahi wanted Merali arrested as it was clear that he was engaged in graft and was trying to bribe President Uhuru Kenyatta.

Yes indeed;DPP why is Merali not in Anti-Corruption Court No One ??

— Paul Muite SC (@Paul_Muite) February 27, 2019

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Seven young men were arrested and later charged for impersonating President Uhuru to secure Ksh80 million facilitation fee for a land deal in Nairobi’s Milimani area.

The seven’s cover was blown after the man sent by Merali to execute the deal got suspicious after sending the first Ksh10 million. Joseph Waswa, Duncan Muchai, Isaac Wajekeche, William Simiyu, David Luganya, Gilbert Kirunja and Anthony Wafula were arrested and later charged with defrauding Sameer Africa Finance Director Akif Hamid Butt of Ksh10 million between January 24 and February 1. They denied the charges and were released on a Ksh 20,000 each.

Lawyer Ahmednasir Abdullahi and activist Boniface Mwangi wanted Merali also prosecuted for bribery, a position supported by Senior Counsel Paul Muite. While these lawyers wanted the Director of Public Prosecutions to prosecute the businessman, the matter had put EACC under the spotlight regarding its commitment to implement the Bribery Act, which was a product of public-private engagement.

“Merali is not a child: he is a 68-year-old man who in 2012 according to Forbes Africa’s richest is worth 410 million dollars. He is President Moi’s business partner in some investments. Merali has been mentioned in the Kroll and the Goldenberg reports on how Kenya was looted by Moi,” Mr Mwangi wrote in a hard-hitting post on his Facebook page.

According to the Bribery Act 2016, giving, receiving or engaging in activities that enable bribery attracts conviction leading to imprisonment for a term not exceeding 10 years or a fine not exceeding Ksh5 million, or both. In addition, the courts may impose an additional mandatory fine if the person incurred quantifiable loss or benefit. Under the law, Butt is equally, therefore, liable for the offence.

This case is not isolated as Merali has been accused elsewhere of paying Sh500,000 bribe to fake Kenya Defense Forces generals in exchange for supply of tyres from his Sameer Africa Group, a deal that turned out to be a scam.