allAfrica.com: Kenya: Governor Ndungu Fights Back (Page 1 of 3)

At the 15 year-old Grand Regency Hotel in Nairobi, the automatic doors slide open as you enter the freestanding monolith that graft built. In the evening, the well-lit parking lot is usually full of limousines as power brokers and seekers congregate at The Summit, a top floor exclusive bar and restaurant, where the who-is-who in Nairobi meet.

Of late the 12-storied facility was getting neglected and early this year a leaking roof at the main lobby saw management place a container to gather the dripping water.

And then came the shocker of the week that saw knives drawn as the Grand Regency took centre stage in the diplomatic fights between Indian and Libyan investors.

Kamlesh Pattni, the man who built this facility, had all of a sudden lost interest in it and was handing it back to the Central Bank of Kenya citing "conscience" as his main reason. The departure of Mr Pattni from the Grand Regency has re-opened debate and a vicious behind-the-scenes battle between the various interests as the facility goes up for grabs.

A group comprising Libyan investors trading as Libyan Arab African Investment Company is pitted against another one of Indians who recently bought a vacant plot next to the hotel. The Indian group boasts of the fifth richest man in the world, Mukesh Ambani, who early last month partnered with an Arabian real estate firm, Arrow Webtex, to form Delta Resources Limited and bought a number of plots close to the hotel. At the Central Bank of Kenya, Governor Njuguna Ndung'u sounds like a worried man.

This week, he was forced to deny that CBK had sold the hotel to Libyan interests. Prof Ndung'u threw several spanners in the works including an allegation that CBK had not received a penny from receivers appointed by the High Court. That not only opened a new battle ground, but left many questions unanswered on the whereabouts of billions of shillings that the hotel earned since 1999. That CBK was taking the battle to the High Court was interesting but not entirely new.

When retired justice Samuel Oguk quit the bench in 2003, the main charge facing him was that he had fraudulently obtained Sh520,000 from a former receiver-manager of Grand Regency, Mr PV Rao.

Mr Oguk happened to be the judge who allowed the eviction of a CBK receiver manager who by the time he departed the bank had recovered Sh460 million. After that the CBK was involved in an unending tussle, and whether the judiciary was compromised will never be known since Mr Oguk opted to retire rather than face scrutiny.

He blamed his fall over the Grand Regency on two people: Gideon Moi and Joshua Kulei. But there was more to it that tainted the judiciary, which has yet to explain the fate of the billions that its appointed receivers got.

Ponangippali Venkata Ramana Rao, once a receiver at Grand Regency, is the man who blew the top on the judiciary. In a sworn affidavit, now a court document, he accused Justice Oguk of irregular involvement in the facility alleging that the judge and his nephew ran, but did not pay, high entertainment bills at the hotel. The employees were surcharged and they informed the then KACA which investigated Mr Oguk. He denied obtaining the money fraudulently but opted to retire instead of face a tribunal that was to be set up to try him.

Years later, the Grand Regency is still claiming more victims as the Goldenberg saga continues to dominate the scene. Apparently, this was the scenario that Prof Ndung'u appears to have been painting as he went to protect CBK from blame and as he put the Kenyan judiciary on the spot. But this time round he also pulled in the anti corruption fighting body - the Aron Ringera run Kenya Anti Corruption Commission.

Seemingly, whatever Mr Pattni touches erupts into a cloud of controversy and intrigue that now seem to be pulling in CBK, KACC, receiver managers appointed by the High Court and interested parties who want to clinch the hotel valued at Sh2.7bn in 1997 by the CBK.

Prof Ndung'u was willing to spill blood: "Since 1999 when the bank's (CBK) appointed receiver manager Joseph Kittony was removed by the High Court and replaced with receivers appointed by the High Court, the Central Bank has not received a single penny from the hotel. During Mr Kittony's term as receiver manager, the Central Bank recovered a sum in excess of Sh460m from the operations of the hotel."

Through court orders and injunctions, Prof Ndung'u says, the Central Bank has over the years been totally locked out of the control and management of the Grand Regency. So, was somebody benefiting illegally from the hotel? Who?

Since 1999, the Grand Regency has on a conservative estimate made Sh2.3billion that has apparently disappeared into thin air and cannot be accounted for. Numerous calls made by Business Daily to the offices of the current receiver managers were not returned.

Consequently, the books of accounts for the past 10 years could not be obtained. The two receiver managers, Peter Ndaa and H. W. Gichohi, were appointed through mutual agreement between Mr Ringera's KACC and Mr Pattni's Uhuru Development Company Limited in 2004.

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