A long-running court battle tied to an old construction deal has pushed Moi University into a fresh financial emergency after the High Court ordered the freezing of its bank accounts over a debt that has now grown to more than Sh1 billion, raising fears over the institution’s ability to keep basic operations running.
The order issued on Thursday by Wananda Anuro affects more than 10 accounts held in different banks, effectively tightening financial movement at a time when the university is preparing to admit new students and manage routine services.
Acting Vice-Chancellor Kiplagat Kotut said the decision has placed the institution in a difficult position, warning that essential operations could be affected if the matter is not urgently resolved. “Complying with the court directive and sustaining operations will be a tall order, considering that it comes when we are preparing to admit first-year students,” he said.
He added that the university is already engaging the government in efforts to find a way out and unlock the frozen accounts. “We are talking to the government to negotiate a settlement and unlock the accounts. We want to avoid a full-blown institutional shutdown,” Prof Kotut added.
Kotut further warned that salaries, student services, and procurement activities are now at risk. “We are staring at a crisis. Only the government can bail us out,” the VC said.
The dispute traces back to a construction contract signed in November 1990 between the university and Vishva Builders Ltd for the development of the Faculty of Science complex at the Eldoret campus. The contract, initially valued at Sh547.7 million, was later adjusted to Sh476.3 million after negotiations.
Work on the project was halted in 1991 after financial difficulties were cited, leaving the project only partially completed. The contract was later mutually terminated in 1999, with an understanding that payment would be made once funds became available and after government verification.
Court documents show that the contractor had received Sh57.2 million plus a retention amount of Sh6.3 million. However, the remaining balance was never settled, triggering a prolonged legal dispute that has lasted decades.
The court later awarded Sh185.3 million, but failure to settle the debt saw interest accumulate over time, pushing the total claim beyond Sh1 billion.
On February 2, 2024, the High Court directed the university to pay Sh1.2 billion after applying interest at prevailing bank rates. A year later, the contractor, represented by Nelson Havi and Company Advocates, secured a decree of Sh1.08 billion following updated interest calculations.
Last month, the court gave the university 30 days to present a repayment plan or face attachment of its 69 bank accounts. After failure to comply, the latest order froze more than 10 accounts, although those reserved for research and student scholarships were exempted.
“Having found in the earlier ruling that the excluded accounts were opened for specific purposes, good order dictates that I uphold that decision,” the judge said.
The court also ordered Moi University to pay legal costs and awarded each affected bank Sh45,000, to be recovered from the institution’s non-exempt accounts. The judge also criticised the prolonged nature of the dispute, saying it is unacceptable for such a large commercial case to remain unresolved for decades.
The financial crisis adds to several other challenges facing the institution. These include a Sh25 million gate construction tender, diversion of Sh7.7 million in student fees into a private account by staff, and a Sh3 billion loan used to modernise the New Rivatex factory after a Sh600 million acquisition.
The university is also struggling with declining student numbers, which have dropped from 48,000 in 2015 to about 21,000, alongside reduced government funding following the introduction of the Differentiated Unit Cost model. Rising personnel costs linked to unresolved Collective Bargaining Agreements have further strained finances.
To address the situation, the university has closed non-viable campuses and rolled out a recovery plan focused on restructuring operations, diversifying income, and reducing staff costs.
Council chairperson Noah Midamba said the institution remains weighed down by long-standing financial and governance challenges. “The university has been constrained by historical challenges that have undermined ability to sustain its standing as a premier institution of higher learning in Kenya,” he said. “If left unaddressed, these challenges pose a grave risk to the long term viability of the institution.”
Midamba added that a five-pillar recovery strategy is underway to restore governance, improve accountability, and rebuild confidence within the institution.
Despite a recent rise in enrolment from 4,500 to 6,750 students in the last academic year, the university still carries certified debts of about Sh8 billion.
The situation has also attracted scrutiny from Auditor-General Nancy Gathungu, who has ordered a forensic audit into the institution’s financial records amid concerns over mismanagement.