28 July 2014

Kenya: Court Halts Further Anglo Leasing Payments

Photo: Times of Zambia
Court gavel.

Nairobi — The Court of Appeal on Monday directed the government not to make further payments for claims linked to 18 Anglo Leasing contracts.

Court of Appeal Judges Philip Waki, Patrick Kiage and Lady Justice Agnes Murgor stopped the payment after an application was filed in the interest of public by the Law Society of Kenya (LSK).

"Pending the hearing and application of the applicants (LSK) intended appeal and petition, there be conservatory orders staying payment of Sh3.5 billion and any other monies resulting from the 18 Anglo Leasing type contracts," the appellate judges ordered.

James Mwamu on behalf of LSK argued that the Treasury is at risk of losing billions of shillings if the government continues to make further payments following the executive order to pay Anglo Leasing companies.

"We are arguing that tax payers risk losing billions of shillings if there is another Executive order to pay money allegedly owe to Anglo Leasing type contracts," Mwamu said.

The LSK has enjoined Treasury Cabinet Secretary Henry Rotich and Attorney General Githu Muigai as respondents in the case.

LSK appealed against an earlier ruling by High Court Judge Justice David Majanja refusing to grant conservatory orders leading to payment of Sh1.4 billion to Universal Satspace (North America) LLC.

The firm later demanded payment of a further Sh3.5 billion in relation to other Anglo Leasing type contracts.

"The decision to pay is baseless, based on untenable grounds and the company being paid was neither registered nor allowed to do transactions of such big amounts," Mwamu said.

According to the lawyer, the judgment of the High Court of Justice Queens Bench (Claim No. 2006 Folio 881) to pay Universal Satspace (North America) LLC was biased.

Universal Satspace (North America) LLC in September 2006 sued the Government over claims of $12,366,816 (Sh1.4 billion) at the Justice Queen's Bench Division Commercial Court in England. The English court entered judgment entered against the Government of Kenya after its defence and counterclaim was struck out delivered on December 20, 2013.

On May 15, President Uhuru Kenyatta authorised the payment of the controversial Anglo Leasing debt, saying further delays were putting the country's economy at risk.

He ordered Treasury to pay Sh1.43 billion (US$16.4 million), which was the outstanding figure following numerous negotiations with the claimants who initially claimed Sh1.64 billion (US$18.8 million).

President Kenyatta said failure to clear the debts was putting Kenya at risk of higher debts as the annual costs of non-settlement would be Sh21 billion, being the cost of higher interest rates on domestic borrowing both for the public and private sectors.

However, he ordered for an investigation into the scam to uncover people behind it.

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