Cockar report: Grand Regency transaction was not transparent

We agree that the sale and registration of properties conducted by advocates are normally undertaken and finalised with a certain amount of confidentiality. No one wants his affairs to be made public and an advocate is expected to take care that the affairs of his clients are not revealed to strangers.

But it is hardly likely that an Advocate of Mr Abuga’s standing will personally take a transfer document to the Lands Office for the purposes of registration and virtually spend two or three days there with each of the officers concerned to ensure that the work involved in the registration proceeds at speed, without interruption and in absolute confidentiality.

The level of secrecy of this transaction was such that even routine correspondence like that applying for consent of transfer and charge the hotel were boldly marked “TOP SECRET AND CONFIDENTIAL”. Our view is that Mr Abuga’s actions do not appear to support transparency in this transaction.

Complex litigation

The Governor explained that on his appointment he found the Bank bedeviled by problems arising from the protracted, costly and complex litigation on the question of the hotel’s ownership and the fact that the CBK had not been involved in its management and had not received a single cent from the hotel’s operation since 1999.

All these factors called for urgent and decisive steps in the interest of both CBK and the general public.

He pointed out that since 1994, CBK had time and again attempted to dispose of the hotel but had been defeated by the injunctive orders issued by the High Court. In 1997, there was a proposed sale at an agreed price of approximately KShs 2.1 billion which failed to go through  after a deposit of Sh210 million had been paid.

The matter was in court for a refund of the KShs 210 million that had been paid. He said that similar interruptions might cause the collapse of this transaction with Laico had made him decide to maintain secrecy from the media and the public and to proceed with expedition after all the necessary details concerning the sale were finally agreed.

The governor said that he had kept the Treasury informed of the developments at every stage and in any case the Permanent Secretary to the Treasury was a member of the Bank’s Board.

The Governor stated that he had also kept briefing the Finance Minister both verbally and in writing though he seemed uncertain how often he had done so. He was emphatic that he had briefed the Minister on several occasions but when pressed on the number of the written briefs he had given the minister he could only refer to the confidential brief.

As for the statement made by the minister in parliament the Governor said that statement was based on the same facts on which his press statement of 22nd April 2008 was made when he handed him the confidential brief.

A copy of this confidential brief was also received by the Director KACC to which the latter had responded in writing on 22nd April 2008.

On the sale of the Hotel the Governor said that as chargee CBK was keen on ensuring the following: (a) that the sale was conducted within the relevant laws and concluded expeditiously, (b) that the Hotel is sold as a going concern in order to protect the jobs of the more than 400 Kenyans working at the Hotel.

Public auction

To achieve the above objective, the purposes the Governor said that CBK had the following options: