A history of litigation

By TNLM Writer

Life has been everything but a bed of roses for the Rai family. Hardly does the dust settle on a longstanding business dispute between its members than another arises, revealing a family that has been at pains to accept some of its own.

Then there is the flour saga, allegations of ill treatment of employees and high stakes corruption.

At the centre of it all is the ownership and control of Rai Plywoods Limited (Raiply) – Kenya’s largest agro forestry concern. Raiply was established in 1971 by family patriarch Tarlochan Singh Rai, who then distributed a stake to each of his family members, including his wife, Sarjit Kaur Rai, his sons Jasbir, Jaswant, Sarbjit and Iqbal Singh Rai as well as daughters Daljir Kaur Hans, Sarjit and Ram Singh. Yet, this was not to mask a bias he had for his second son Jaswant and a corresponding disdain for Jasbir. The two would fall out so spectacularly.

A father-son gang of pilfers

Sometime in the late 1990s, a dispute arose among the Rais surrounding allegations that Jaswant had secretly been taking large sums of money from the business which he then invested in other businesses that he owned alone. Earlier on, he, with his father, Tarlochan, had incorporated Rai Products Limited to market Raiply products.

For a long time, Raiply supplied goods to Rai Products on credit. Everything went swimmingly until 1992 when Jasbir insisted that Rai Products pay for the goods in advance. According to him, all the profits made by Rai Products ought to belong to the family and not to Tarlochan and Jaswant alone.

The basis of his claim was that Tarcholan had assured him, Iqbal and Sarbjit that although Rai Products shares were held by Tarcholan and his beloved Jaswant, all of them would be considered equal shareholders.

Unamused, Jasbir formed Wood Panels Limited to take away the marketing business Rai Products enjoyed. In the meantime, he, together with Iqbal, Kaur Hans and Sarjit Kaur, filed a suit in the High Court seeking orders to trace and recover assets they alleged had been siphoned from the main business.

Among others, they said the siphoned money had been used to buy off Timsales Limited, a competitor of Raiply Limited, and also a minority shareholding in the Commercial Bank of Africa. They sought to have the company dissolved to benefit all shareholders.

The High Court, however, dismissed the suit necessitating an appeal to the Court of Appeal where Justice A.B. Shah (as he then was) sat as one the judges. The Court of Appeal not only upheld the decision of the High Court before it, suo motu, but it also issued orders requiring the parties to the dispute to submit to arbitration. In their decisions, both courts contended that the verbal agreement between a father and his sons could not be enforced. In doing so they ignored the close relationship within the family that obviously extended to their business dealings.

Long after the Court of Appeal had dismissed the suit, it emerged that in the course of the proceedings, Justice Shah had maintained a close relationship with one Goswami, who was not only the advocate for the defendants, including Jaswant, but also a director in Raiply and its chairman when the transactions in question took place.

In a subsequent appeal to the Supreme Court, the petitioners sought, inter alia, that the decision of the High Court be overturned on the basis of this newfound evidence, and that Justice Philip Tunoi, who had earlier recused himself in another matter involving Jaswant, recuse himself from hearing and deciding the appeal.

Although the Supreme Court denied the latter application, Tunoi, like Shah before him, would exit the Court in shame for taking a Sh200 milliob bribe. Even more curious is the fact that Tunoi was allowed to sit on the sole basis there would be no quorum if he was to step aside as the petitioners had prayed. 

At the Supreme Court, evidence was produced showing that Justice Shah had assisted Goswami in drafting the petition, which he was now participating in hearing. A complaint to the Kenya Anti-Corruption Commission led to a raid on Goswami’s law firm where his diary was recovered. It contained entries of several lunch appointments between the two that took place as the court case proceeded.

Dad’s property, son’s property

There were also handwritten notes from Justice Shah on official Court of Appeal notepaper forwarding a draft petition which Justice Shah asked Goswami to have typed so they could discuss it later. A memo from Goswami to Justice Shah was also recovered in which he asked for certain favours of the judge and concluded, “AB — there is a fee on this”. Bizarrely, the Supreme Court ignored this evidence, and ruled that it didn’t have jurisdiction to hear the appeal.

Before their dalliance came to light, Shah, like Tunoi, had vehemently denied serious allegations of misconduct levelled against him. It may be remembered that he actually broke down in tears upon hearing of his suspension, swearing that he had never taken a bribe let alone personally fetch bribes as had severally been alleged.

And although he retired, the damage had already been done. Together with Tunoi, they had midwifed one the most obvious instances of a miscarriage of justice the country had witnessed.

A history tainted with fraud and an aggressive investment strategy that cares nothing for family, friend or foes is sufficient testament that some things are not beyond Jaswant”

In August 2015, five years after Tarlochan died, Jasbir and Iqbal returned to court seeking orders that Jaswant produce before the Court the last will and testament of the deceased patriarch. In their supporting affidavit, they stated that Jaswant had refused to disclose the contents of the will or apply for a grant of probate in order to execute in spite of having been in possession of it for more than five years.

While the court granted the prayers sought, the contents of the will, and indeed the substance of the distribution, remains a mystery. What is known is that the death of Tarlochan left Jaswant as the single majority shareholder in Raiply.

In 2013, Jaswant and Jasbir found themselves in court again, this time in their capacity as the directors of Raiply, which had been accused of stealing from its own employees.

According to the facts, as they were presented in court, Raiply effected illegal monthly deductions on its employees who had purchased a loan facility from the National Bank of Kenya. In the process of effecting the deductions, Raiply apportioned itself a 5% of the loan being the repayment instalment facilitation fee as defined for them.

Their basis for doing so was a clause they had sneaked into a contract for repayment RaiPly had signed with its employees long after they had agreed with the bank on the amount of money to be loaned and the repayment instalments. Curiously even after the discovery of this fraud, the court let them off, without any criminal sanction.

In another demonstration of raw callousness, he, in 2014 dragged Butali Sugar into a lengthy and costly court case when the latter sought to have its operating licence renewed.

After several flopped attempts to cripple Butali, West Kenya resorted to questioning whether the newly created Agriculture and Food Authority was rightfully constituted to renew the former’s licence, leading to a chastising from Justice George Odunga, who noted Jaswant’s knack for “unhelpful litigation geared towards championing protectionist interests in a manner reminiscence of the old imperialist tendencies to the detriment of the people who toil to ensure their industries thrive…”

With no capacity for shame, Jaswant – who loves to file cases in towns distant from his Western Kenya operating base – appealed. It is something he would do again and again, even to Indian-owned Polysack Limited in Busia County, which is yet to start operating since it was granted a licence in 2012 .

A history tainted with fraud and an aggressive investment strategy that cares nothing for family, friend or foes is sufficient testament that some things are not beyond him. Let’s wait and see.

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