Cockar report: Grand Regency transaction was not transparent

2) Likewise the sale could be made free of any obligation or warranties.

We stress that none of the reasons the Governor gave could either singly or collectively justify the deprivation of opportunity caused to any other party interested in purchasing the Hotel.

Neither does it justify the loss to CBK and the public of the opportunity to earn maximum value from the sale of the Hotel.

No legitimacy

Fear of obstructions to the sale has no legitimacy, because in the first place the owners of the Hotel had already handed over the Hotel to CBK. Mr. Kittony who was said to have a claim had not shown any serious interest either way in the transaction.

One of the Reciever/Managers, Mr. Gichohi, had filed a suit on 3rd July, 2008 against UHDL, CBK and Laico, but we are of the view that his claim would not have thrown CBK into a panic, such that it would rush the sale of the Hotel.

We have considered this matter from different perspectives and find that this transaction was not transparent and further there was no legitimate excuse for it to be executed in such secrecy.

On the other hand all the evidence has established that the hotel had all the while been earmarked to be sold only to Laico and no other party. At every crucial steps, some legal and some not so legal, were taken to ensure the achievement of the sale and transfer of the Hotel secretly and hastily to Laico.

Was the hotel undervalued?

The governor said that at the start of the negotiations he had asked for a price of 53 million US dollars for the hotel but he could not explain from where he had obtained this figure.
He was asked why not 55 million US dollars or 60 million US dollars.

His explanation of how he had arrived at his initial asking price of 53 million dollars was not credible. He said he had added the highest figure to the lowest of the three valuations and that came to 53 million dollars.

The highest valuation before him was from Ark Consultants Ltd, which at Sh70 to the US dollar was equivalent to 31 million US dollars and the lowest valuation was from Value Zone Ltd and was equivalent to 23 million US dollars. But added together the total of these valuations would come to 54 million dollars and not 53 million dollars.

In any case if the intention of the governor was to use the valuation figures to arrive at an average value then the correct arithmetic should have been to divide the 54 million dollars by two, or to have added up the three valuations and then divided the total by three.

That would appear to be the logical way of utilizing the valuation reports to get a meaningful figure from them. Such an absurd explanation from a person of his stature can only mean that the governor was not being truthful as to the source of his figure of 53 million US dollars.

As we stated earlier we found the valuation reports by the three values unreliable and of little help to the commission. The Chief Valuer in the Department of Lands, Mr Anthony M. Itui, had visited the Hotel and valued it at Sh2 billion.