Muchemi Wachira
18 September 2008
Nairobi — The Central Bank of Kenya Thursday confirmed that a purchaser of the Grand Regency Hotel was identified during President Kibaki's visit to Libya in June last year.
And this, Mr Kennedy Abuga, the bank's legal services director, said, turned out to be a godsend for the institution, which had been trying to dispose of the hotel to recover Sh2.5 billion owed to it by Goldenberg architect Kamlesh Pattni.
However, Mr Abuga told the Cockar commission that he only came to learn about the Libyan buyers in August last year from the press.
Expressed interest
Mr Abuga was being cross examined by Mr Stephen Mwenesi, who is appearing for the law firm of Wetang'ula, Adan & Makokha Advocates, which represented Mr Pattni during negotiations to hand over the hotel to the CBK.
President Kibaki visited Libya between June 4 and 6 last year and during the visit, the Libyan government expressed interest in investing in Kenya with one of the projects being the five-star city hotel.
After the Libyans expressed their interest, Mr Abuga said, the CBK board, of which he is also the secretary, was later briefed. It is at this time that the process to dispose of the Grand Regency started, the witness confirmed.
He also said that the Libyan Arab Investment Company, which bought the hotel, is a subsidiary of the Libyan state, which is incorporated by a Kenyan company.
Before Mr Mwenesi started his cross-examination, it emerged that there was a divergence of views between the CBK and the Kenya Anti-Corruption Commission over the mode of selling the hotel.
Could not apply
Mr Abuga said that the graft body wanted the bank to adhere to the Public Procurement and Disposal Act in selling the hotel. The Act, he said, could not apply.
The witness also denied that the graft watchdog's deputy director, Ms Fatuma Sichale, was to look at the Privatisation Act and communicate to them her findings.
The commission heard that CBK had sought the assistance of the graft body in disposing of the hotel.
At first, the anti-graft commission succeeded in registering a consent order in court, which saw to the removal of two joint receiver-managers at the hotel. The order saw Mr Pattni hand over the hotel to the bank.
However, the method of disposing of the hotel brought controversy between the anti-corruption commission and CBK since the latter decided to use its statutory power of sale.
Mr Abuga also said that the Central Bank of Kenya did not consult their lawyers over the method of disposal, but proceeded to use its statutory power of sale.
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