Embakasi East MP Aspirant Francis Wambugu Mureithi Implicated in Sh320 Million Fraud Case Involving Shares of Deceased Investor

NAIROBI, Kenya – Former Embakasi East MP aspirant Francis Wambugu Mureithi has been thrust into legal controversy after being accused of fraudulently acquiring company shares belonging to the late Italian investor Gonzalo Hernadez Ciriza. The contested shares are part of Meridian Acceptances Limited (MAL), a microfinance institution known for advancing loans to business owners and automobile dealers.

At the heart of the scandal is Doc Find Company Limited—also known as House of Procurements Limited (HPL)—where Mureithi serves as a director. HPL is now accused of using forged documents and misrepresentations to unlawfully take over shares and directorship in MAL, allegedly disinheriting the rightful heirs of the late investor.

The case, which has escalated to the High Court Commercial Division, shines a spotlight on what appears to be a calculated attempt to manipulate the Kenya Ministry of Defence tender scam-style corporate records to seize control of the company. Filed under a certificate of urgency, the suit is being prosecuted by lawyer Geoffrey Langat on behalf of James Ndwigah Muchungu, a co-founder and long-standing shareholder of MAL.

According to Muchungu, his removal as a director and shareholder of MAL was executed through fraudulent filings at the Registrar of Companies (RoC), orchestrated by Mureithi via HPL. He alleges that these actions are part of a broader Sh320 million fraud, reflecting the high-stakes nature of the dispute. The plaintiff is seeking to have the court freeze all company accounts held at Kingdom Bank Limited and Kenya Commercial Bank, while also requesting an injunction against any further unauthorised activity.

Court filings indicate that HPL forged company returns, altering the shareholding and directorship structure without the approval of other shareholders or the heirs of Ciriza, who died in 2018. The AGM purportedly held by HPL on February 2, 2023, included only Francis Wambugu Mureithi and Bernard Odote, effectively sidelining other stakeholders.

Langat emphasised in court documents that MAL’s Articles of Association specifically grant preemptive rights to existing shareholders before any transfer of shares can be executed. As such, any attempt to reallocate shares without the consent of other directors is a clear breach of the company’s founding charter.

The late Gonzalo Hernadez Ciriza’s heirs—including Paloma Mosequera Ciriza, Eduardo Hernadez Ciriza, and Joan Hernadez Ciriza—were not consulted in the transfer of shares. Muchungu claims that this exclusion is both illegal and unethical, given the significant stake the deceased held in the company.

Despite being a minority shareholder with only 37.7%, Mureithi is accused of attempting to commandeer control of MAL in what Langat described as “a corporate coup by the minority.” Langat argues that this action undermines the principles of corporate governance and disregards due process.

However, HPL director Bernard Odote contends that HPL is a legally distinct entity and that its involvement in the case is unwarranted. Furthermore, he asserts that Muchungu is currently facing a criminal case involving the alleged embezzlement of Sh200 million from MAL during his tenure as director.

Odote cited a High Court ruling in November 2021 by Justice David Majanja, which barred Muchungu from engaging in MAL’s operations and ordered him to return all company property. This prior ruling could influence the outcome of the current proceedings.

The Registrar of Companies, listed as the first defendant, has yet to respond to the suit. The High Court has scheduled the hearing for October 2, 2023, where both HPL and the RoC will be expected to clarify their roles in the contested transactions.

This case continues to attract public attention not only because of the alleged Sh320 million fraud but also due to the high-profile figures involved, including a former Embakasi East MP aspirant and an international investor. The court’s decision could have wide-reaching implications for corporate governance, shareholder rights, and foreign investment in Kenya.