This archive report was first published on 14 July 2019.
Published on July 14, 2019, a planned auction of politician Njenga Karume's Jacaranda Hotel in Nairobi has shed light on the challenges of trusts in Kenya.
Trusts are meant to preserve assets and manage transitions to ensure a business thrives and grows in line with the founder's vision. However, recent happenings reveal a glaring gap in Kenyan trusts.
The Karume Trust has been embroiled in several suits filed by the family, who have accused the trust of running down his properties.
Advantech Consulting managing director Joseph Waruingi attributes family conflicts and the collapse of once successful businesses to a lack of management processes and systems that perpetuate loopholes for theft and wastage.
“Founders and their children hardly have management expertise for businesses that grow beyond a single branch,” said Mr Waruingi, a former PwC partner.
Mauritius-based attorney Asaad Abdullatiff, who runs Axis Fiduciary, advises that trusts, when well managed, should enable firms and families to smoothly negotiate transitions.
“A trust does not necessarily have to take over the management of a business, but should oversee its operations with the inclusion of heirs in their respective roles,” he says.
Mr Abdullatiff warns that blind expansion without proper corporate structures in place exposes the business to further family feuds fuelled by increased mistrust.
