Matrimonial property row: Billionaire Peter Munga's wife fights Sh433m loan case

Does a spouse have any say on a loan taken during a marriage?

This is the question that the Commercial Court will have to settle in a Sh433 million loan row pitting the business mogul Peter Munga, Africa Banking Corporation (ABC), ABC Capital and Central Depository and Settlement Corporation.

And now, his wife, Rose Njambi, has brought a new twist to the battle by suing her husband, ABC and CDSC, arguing that she was unaware that the billionaire had offered shares valued at Sh604 million at Britam Insurance Company as security for the loan.

Munga, who is the founder of Equity Bank Group and its former chair, has been in a long, drawn fight with ABC over a loan issued to one of his companies, Equatorial Nut Processors, a macadamia processing company. He guaranteed the firm with the Britam shares.

He tried to stop the auction twice, before Justice Alfred Mabeya and subsequently before Justice Dora Chepkwony in Kiambu, but failed.

In her case, Njambi told Justice Peter Mulwa that she has been in a long-standing marriage with Munga.

According to her, they have acquired during their marriage several properties, including 25 million shares, which she owns and a further 50 million which are owned by Munga in the same company.

She argued that Munga’s stake at Britam was acquired during their marriage, and she had contributed towards the purchase.

“The said 50 million shares are thus matrimonial property within the meaning of Section Six of the Matrimonial Property which the applicant has a proprietary life interest,” argued Njambi.

She alleged that she was shocked to learn that her husband pledged the shares as security to ABC without her written and informed spousal consent.

She said to add salt to injury, he allegedly silently even used her stake at the insurance firm to secure the loan advanced by ABC.

“Unless this court urgently intervenes and arrests the situation, there is a real and imminent risk that the defendants will illegally dispose of 25 million shares owned by the applicant in Britam insurance Company Ltd, despite the fact that the applicant has never been advanced a loan by the defendant not has she ever pledged the said 25 million shares as security,” she argued.

Njambi asserted she has a right to equality in marriage. "The transaction offends the constitutional right to equality in marriage under Article 45(3) of the Constitution, which affirms that parties to a marriage are entitled to equal rights at the time of the marriage, during the marriage, and at its dissolution," said Njambi, adding that by ABC selling her stake and that of Munga’s, her beneficial interest and future will be extinguished.

She stated that ABC had already started the process of auctioning the shares.

Munga’s wife said that she was willing to deposit Sh100 million to the court as a guarantee as she fights for her rights.

“The balance of convenience tilts in favour of preserving the status quo until the matter can be heard inter parties as any delay would embolden the defendants to proceed with the disposal and defeat the ends of justice,” her lawyers Eric Theuri and Tali Tali argued.

In her supporting affidavit, Njambi alleged that she came to learn about her shares in Britam through a correspondence between Munga and ABC. She stated that it was illegal for Munga to have offered the shares while knowing that she needed to consent before he made any move.

“I am deeply alarmed that the shares may be disposed of at any time, in a manner designed to defeat my rights as a spouse and to permanently alienate matrimonial property without my participation. The unilateral pledge or use of the shares as collateral, without my spousal consent, is illegal, voidable and contrary to public policy,” she said.

The battle between the businessman and ABC started in 2024.  According to Njambi, the first case, which had been filed at Milimani Commercial Court, has since been withdrawn.

In this case, Munga argued that the amount demanded by the bank exceeded the principal amount borrowed. Munga holds a 92 per cent stake in Equatorial Nuts, while James Karanja has an eight per cent stake.

Munga said that it would be unfair to sell off the shares, as he intended to take another loan while using them as security.

In reply, ABC claimed that it offered the loan to the Maragua-based processor several times, with both Munga and the firm acknowledging this by signing the offer letters issued to them. At the same time, ABC’s senior legal manager Faith Nteere argued that Munga had executed the documents both in his personal capacity and as a director.

She asserted that he was liable if Equatorial defaulted.

The court also heard that the condition was that the loan would only be offered if all the shares were provided prior to the loan being disbursed.

Justice Mabeya agreed with the bank. He said that the businessman had agreed to be personally bound to the terms set by ABC. According to the judge, Equatorial had not honoured its end of the bargain when Munga was moving to court.

“The Court has already held that a chargee cannot be prohibited from realising a security of a loan in the event of default unless the debt is paid into court. In the absence of such payment, the Court finds that the prayer for a permanent injunction preventing the first defendant from realising the security is untenable and is disallowed,” said Justice Mabeya.

Munga then moved to the Kiambu Court, before Justice Chepkwony.

The court first suspended the auction, but later lifted the order after ABC raised concerns that the businessman had filed another case over the same issue and lost.

In this case, he was questioning why the bank had opted to come after his shares before pursuing the primary debtor, which was Equatorial.

In response, the bank argued that the case was an abuse of the court process as he had not disclosed that he had filed a case at Milimani.

In a rejoinder, Munga argued that the initial case had been withdrawn.

“As for the subsequent withdrawal of the Milimani matter, which was done only after the material non-disclosure was brought forth by the defendants, this is not a cure for the initial concealment. This Court is therefore duty-bound to protect the sanctity of its process by declining to endorse conduct that undermines the fair administration of justice,” ruled Justice Chepkwony.

In her case, Njambi said that in all the cases filed over the loan, she was not involved as a party or served with the court papers.

“I was not a party to any of the above litigation and none of the litigation involved questions of the shares as matrimonial property to which the I have an interest in. wing to the eminent irreparable risk to be occasioned by the sale of the shares to which I have a matrimonial interest in, I am ready and willing to deposit a sum of Kenya Shillings One Hundred Million (Sh100 million) to act as security during the pendency of the present proceedings,” she said.

In response to Njambi, ABC argued that the case was in bad faith. According to Nteere, the cases in court had blocked the bank from selling the shares since September 2024.

She claimed that Njambi’s case was among the many hurdles placed by Munga to ensure that it does not sell off the Britam shares.

“The present application and suit are an afterthought and amount to a judicial lottery that is common among many borrowers who, having lost the cases on merit, instigate fresh suits through alleged spouses in an attempt to defeat recovery efforts by lenders at all costs,” replied Nteere.

She argued that Njambi had not revealed to the court the outcome of three separate cases that had been filed by her husband.

The officer stated that ABC offered Equatorial an offer letter on November 7, 2003, for a Sh287 million loan. Out of this, she said, the firm had not paid Sh88 million. At the same time, she stated that there was a separate loan of Sh112 million, of which 30 remained unpaid.

In addition, she said that there were two short-term loans of Sh102 million and Sh100 million, with Sh84 million and Sh40 million pending. The second short-term loan was to facilitate 80 per cent financing for Guangzhou Macadamia Nuts exports.

Nteere also said that there was a revolving short-term loan contract financing with a limit of Sh249 million and had a balance of Sh119 million. This was in relation to Kemsa/ Global Fund Contract.

The last was in relation to World Food Programme contract financing, which was worth Sh36 million. She stated that Munga offered 75 million shares at Britam and his stake and Genghis Capital Ltd.

According to her, the shares were worth Sh410 million in addition to USD 1.9 million. She further argued that Njambi had not brought evidence that she was married to him.

“The application stands on quicksand, and it collapses on its own weight when considered against settled principles of law on the validity of securities that have been impugned for lack of spousal consent,” replied Nteere.

Justice Mulwa froze the sale until September 18, when the case will be heard.