@BusinessDaily

How politics brought down Matiba’s business empire

5 months ago, 17 Apr 03:00

By: Geoffrey Irungu

Within three days after the Likoni Police Station was attacked on August 13, 1997, the hotel business that Kenneth Matiba had built over many years was left without customers and most of the employees had lost their jobs. Unknown to many, this incident marked the beginning of the end for one of the crown jewels of Mr Matiba’s multi-billion shilling empire. The attack came just five years after Mr Matiba’s relationship with the then autocratic Daniel arap Moi regime was at its lowest point. The combative politician-cum-businessman had run against Mr Moi for the presidency following the re-introduction of multi-party politics in 1992. The hotels never recovered and were eventually sold off to pay loans that had accumulated. Mr Matiba’s ability to service the loans was also weakened by the high interest rates that persisted for the better part of the 1990s as the economy struggled through the impact of high inflation, massive corruption (including the mega Goldenberg scandal) and political turmoil that followed the return of multi-party democracy, recalls a one-time personal assistant Irungu Ndirangu in an interview. The hotels had been the most visible part of the Matiba business empire, and their collapse seemed to only signal the start of even deeper business trouble for the veteran politician. “The year before the Likoni clashes, the hotels made over Sh50 million, which was a lot of money at the time. I was then his personal assistant and I think he was excited because he told me about this profit himself. Within three days of the attack, the hotels had no customers and over 200 workers were jobless,” Mr Ndirangu said. Besides the hotels, Mr Matiba had also established schools – the best known among them Hillcrest. He also had interests in agricultural enterprises as well as media after he founded the People Daily — the newspaper that is currently owned by the Kenyatta family company MediaMax. Mr Matiba was the single largest investor in carbon dioxide manufacturer Carbacid from where his business and political rivals began the process of kicking him out in 2002. The company’s chairman, Maina Wanjigi, declared at the annual general meeting that Mr Matiba was no longer on the board of the firm. Neither the politician’s son, Raymond, nor his long-serving financial adviser (now with a local audit and financial advisory firm) David Kabeberi was invited to take up two of Mr Matiba’s seats on the board. The fight between a section of the board and the Matiba family continued for several years, ending with the veteran politician selling his stake in the firm a few years ago. Hillcrest Schools suffered a similar fate after Mr Matiba was forced to sell the business to Fanisi Capital — a private equity firm —  in 2011 because of heavy debt. The institution had been unable to pay Sh600 million debt it owed Barclays Bank, which promptly moved to court to recover its money. Before he became the MP for Kiharu in 1979, Mr Matiba had, together with members ...
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Category: business opinion news economy lifestyle corporate markets

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@BusinessDaily

How politics brought down Matiba’s business empire

5 months ago, 17 Apr 03:00

By: Geoffrey Irungu
Within three days after the Likoni Police Station was attacked on August 13, 1997, the hotel business that Kenneth Matiba had built over many years was left without customers and most of the employees had lost their jobs. Unknown to many, this incident marked the beginning of the end for one of the crown jewels of Mr Matiba’s multi-billion shilling empire. The attack came just five years after Mr Matiba’s relationship with the then autocratic Daniel arap Moi regime was at its lowest point. The combative politician-cum-businessman had run against Mr Moi for the presidency following the re-introduction of multi-party politics in 1992. The hotels never recovered and were eventually sold off to pay loans that had accumulated. Mr Matiba’s ability to service the loans was also weakened by the high interest rates that persisted for the better part of the 1990s as the economy struggled through the impact of high inflation, massive corruption (including the mega Goldenberg scandal) and political turmoil that followed the return of multi-party democracy, recalls a one-time personal assistant Irungu Ndirangu in an interview. The hotels had been the most visible part of the Matiba business empire, and their collapse seemed to only signal the start of even deeper business trouble for the veteran politician. “The year before the Likoni clashes, the hotels made over Sh50 million, which was a lot of money at the time. I was then his personal assistant and I think he was excited because he told me about this profit himself. Within three days of the attack, the hotels had no customers and over 200 workers were jobless,” Mr Ndirangu said. Besides the hotels, Mr Matiba had also established schools – the best known among them Hillcrest. He also had interests in agricultural enterprises as well as media after he founded the People Daily — the newspaper that is currently owned by the Kenyatta family company MediaMax. Mr Matiba was the single largest investor in carbon dioxide manufacturer Carbacid from where his business and political rivals began the process of kicking him out in 2002. The company’s chairman, Maina Wanjigi, declared at the annual general meeting that Mr Matiba was no longer on the board of the firm. Neither the politician’s son, Raymond, nor his long-serving financial adviser (now with a local audit and financial advisory firm) David Kabeberi was invited to take up two of Mr Matiba’s seats on the board. The fight between a section of the board and the Matiba family continued for several years, ending with the veteran politician selling his stake in the firm a few years ago. Hillcrest Schools suffered a similar fate after Mr Matiba was forced to sell the business to Fanisi Capital — a private equity firm —  in 2011 because of heavy debt. The institution had been unable to pay Sh600 million debt it owed Barclays Bank, which promptly moved to court to recover its money. Before he became the MP for Kiharu in 1979, Mr Matiba had, together with members ...
Read More

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