Low-price offers and lack of goodwill is holding back the sale of assets owned by the collapsed Kenya National Assurance Company (KNAC).
The collapsed state insurer has for the past 20 years struggled to offload its land parcels some of which have already been occupied by squatters.
Ongoing attempts to resolve a 20- year land ownership dispute that will see the insurer fully close down took centre stage after Senators raised concerns over delays in resolving the company’s liquidation and the significant challenges arising from illegal occupation of its properties.
In submissions to the Senate Trade and Budget Committee, KNAC said it had initiated an auction process for some of its assets, with 675 bids received and 613 deemed successful.
However, of these, only 39 successful bidders have fully paid for their plots, stalling progress in the sale process.
KNAC said that to expedite resolution of some of the cases, the Mombasa County government had suggested a 50 percent discount on sale prices.
However, the Attorney General’s legal opinion raised concerns over the legality of such discounts, given that insolvency proceedings began over two decades ago.
Senators questioned the feasibility of KNAC reclaiming its properties given court rulings dating back to 2009 that cited difficulty in enforcing eviction orders amid resistance from occupants.
“Sincerely speaking, and to be very fair, in all aspects, I feel the squatters have taken advantage of the system through the court processes. They’ve just taken advantage of the law to try and remain the squatters in there through court process, said Mombasa Senator Faki Mohamed.
KNAC CEO Tabitha Mwaniki said that the firm has been selling the properties and channeling the funds to the Unclaimed Financial Assets Authority.
Alongside the low payment for disposed properties, Mwaniki claimed that potential buyers have persistently undervalued its properties, attributing this to a belief that government-owned assets could be obtained cheaply.
“The company owned a number of commercial properties in the city, including Protection House, Town House, Salama House, and Corner House, and all of them were for sale to raise money to pay policyholders,” said Mwaniki.
She pointed out that some of the properties were quoted at a third of the price despite being strategically located in the CBD.
“Because the government owns it, people think they can get them for a song,” added the CEO.
The insurer was forced to offload some of its assets below market price to offset some of the owed claims. These include Corner House located along Kimathi Street in Nairobi, which fetched Sh701 million in 2008, and Salama House at the corner of Wabera and Mama Ngina Streets, at Sh128 million in 2007.
Other properties, including Bima House, Protection House, and Town House in Nairobi’s central business district, which were disposed of by KNAC’s successor, the Kenya National Assurance Company ( 2001 ) Limited, which took over the assets and liabilities of the Closed Life Fund in January 2003.
Bima House, located along Harambee Avenue in Nairobi, stands on a 0.4295-acre plot and was sold to the Ministry of Finance at the government’s valuer price of Sh560 million in August 2004.
Protection House at the junction of Parliament Road and Haile Selassie Avenue in Nairobi was sold to the Ministry of Housing in 2008 at a reserve price of Sh220 million, being the valuation figure arrived at by the government valuer in 2004.
The property has since been acquired by Parliament at a cost of
Sh1.2 billion.
