The dream of high-rise apartments in Nairobi’s Eastlands slipped into disarray thanks to deceptive friendship. This intriguing tale begins 5 decades ago and features a Jewish, Joseph Goldberger and the late Stanley Githunguri in a classical case of a friends turned foes.
In the early ’70s, Goldberger had acquired a 900 acre piece of land that sits in present day Donholm and Tena estates. He had an ambitious plan to build a robust housing project but he made one big mistake: Goldberger trusted Githunguri who turned out to be a master of chicanery.
In this article, WoK reveals how Goldberger became a victim of a well orchestrated Ksh 50 million scam, a matter which gave rise to the poor housing plan of current Eastlands.
Continental Developers Limited
In 1973, Goldberger registered a company named Continental Developers Limited that would steer his real estate project to actualization. According to the Daily Nation, Goldberger brought in relatives of the first family as a way of protecting his company. Jomo Kenyatta’s daughter Margaret, Dr Njoroge Mungai (Kenyatta’s first cousin) and Harun Muturi (Kenyatta’s in-law) were listed as co-directors.
Goldberger resorted to selling some of the land in order to raise funds for his project. He sold some 98 acres to a teachers’ sacco in Nairobi but ensured his company designed a well laid out infrastructure plan.
Introduction to Githunguri
The Jewish tycoon thought he had struck a breakthrough when he was introduced to Stanley Githunguri, then working as an executive chair of National Bank of Kenya (NBK). They established a camaraderie which Goldberger would use to ask for loans.
On November 19, 1976, Goldberger and Muturi met Githunguri and received a Ksh 10 million loan from NBK to develop Donholm Estate houses. Then Goldberger agreed to sell part of Donholm farm to Githunguri’s company, Tassia Coffee Estates Limited.
Continental Developers would build 814 houses for Ksh 164 million on the land that Githunguri had acquired.
However, it later turned out that the NBK chairman was after defrauding the bank in a well organised scam. He intended to have the bank purchase the houses for its employees after completion of the project.
In November 1978, Continental asked for a Ksh 85 million loan and received Ksh 80 million a few days later. But there were conditions attached: The company guaranteed the loan against its vast land, then valued at Ksh 200 million.
Secondly, they had to liquidate the developed assets within a period of two years in order to offset the loan.
50 million into a fixed interest account
As Continental now had their account credited, Githunguri asked for a whopping ksh 50 million that would be deposited into a fixed deposit account.
The former Kiambaa MP asked Goldberger to write two cheques for Sh15 million and Sh20 million in favour of Ms Njeri Njoroge and another cheque of Sh15 million in the name of Jenkinson & Parekh. The latter was a company that had been mentioned in a previous maize scam.
Trusting his ‘friend’, Goldberger obliged. After two years, Muturi (one of the directors of Continental) realized that the company was paying for a loan that it could not access. Additionally, NBK was deducting funds from the company’s account and demanded a Ksh 127 million pay.
The judge handling this matter questioned how Goldberger signed a Ksh 50 million cheque to strangers. This is after Githunguri distanced himself from the fraudulent allegations. Githunguri also said that he was not associated with Tassia Coffee Estates Limited.
“I find it very difficult to believe that Mr Goldberger and Mr Muturi would pay out Sh50 million to strangers merely on a verbal promise by the executive chairman of the bank. However, I have no doubt that Mr Githunguri did indeed ask that the cheques be made out in the names of the two payees,” said Judge Simpson.
The judge found out that Githunguri’s initials appeared on the cheques issued. However, he ruled that Githunguri made the transactions as an individual and not on behalf of NBK.
“It follows that (Continental Developers) owes money to National Bank and National Bank owes no money to Continental,” said the judge.
Auctioneers would later land on the project as it suffered a permanent death. Meanwhile, in 1980 Githunguri went on to build Lilian Towers even as Goldberger collaborated with Raymond Moi in coming up with 88 bungalows at Tena Estate.
As Goldberger later flew out of Kenya, his ambition of a well organised Eastlands was replaced with disorderly developments.