11 May 2014

Kenya May Have to Pay Sh3 Billion for 1970s Scandal

Treasury Secretary Henry Rotich, Attorney General Githu Muigai and Solicitor General Njee Muturi are expected to appear before a House committee over the controversial Ken Ren and Anglo Leasing payments.

They are expected before the Public Accounts Committee of the National Assembly on May 21 after audit queries were raised in the previous accounts of the National Treasury.

The decision to summon the trio comes after fears that other than the Sh1.4 billion Anglo Leasing judgment debt, Kenya may also be slapped with a Sh3 billion Ken Ren debt after a decision by the government to establish a fertiliser processing plant in Mombasa failed.

The agreement to establish the fertiliser factory was entered into in the 1970s between the government and Ken Ren, an American company where the government was both a shareholder and a guarantor of the project.

However, the deal collapsed and the factory was never built as it ended up in liquidation besides being embroiled in litigations in Europe to seek compensation from the government.

Committee chairman Ababu Namwamba said at the centre of scrutiny is the role Treasury played. It was then headed by retired President Kibaki as Finance minister.

Some Sh2.19 billion are supposedly owed to Bawag, an Austrian bank and Sh974 million toDucroire a Belgium enterprise firm on the account of the company's transactions in the country.

The National Treasury and the attorney general's office have been in the forefront pushing payments to Anglo Leasing companies - First Mercantile and Universal Satspace Securities - in judgment debts over the alleged losing of Kenya's appeal cases in the United Kingdom and Switzerland.

Namwamba said that the Anglo Leasing payment is the subject of audit queries raised in the financial years 2010-11 and 2011-12.

The PAC move comes after a motion seeking the approval of the House to expedite the payments was shelved just before it went on a month-long recess on April 30.

The Budget and Appropriations committee chairman Mutava Musyimi withdrew the motion even after the committee jointly with that of Finance, Trade and Planning had voted to approve the payments.

"The matter must and can't conclude before debate concludes. The committee expects them to submit response to issues raised by the auditor general," Namwamba said. They are expected to respond to doubts appearing prominently in the Auditor General's report that include the cancellation of the Anglo Leasing contracts by the Narc administration upon assuming power in 2002 and the Sh291 million legal fees paid to the Dentons, an international law firm in the UK.

The law firm was hired by the AG on the recommendations of the National Security Advisory Council chaired by Head of Public Service Joseph Kinyua to find out whether the appeal mechanisms had been exhausted by the government against the debts.

The committee is also expected to audit the quality of legal and consultancy services offered by Dentons and how the executive has handled the matter.

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