Cockar report: Grand Regency transaction was not transparent

Chapter Four of the Report on the Commission of Inquiry into The Sale of the Grand Regency Hotel outlines “other issues considered” by the commission as follows:

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Was the Sale of The Hotel a Government To Government Transaction?

It was vigorously maintained by the Governor that the sale of the hotel was in consequence of an agreement arrived at between the governments of Kenya and Libya. His reason for so maintaining was based on the following grounds:

1. The Memorandum of Understanding (MOU), which was the outcome of the official visit by the President of Libya from 4th to 6th June, 2007 had been sent to the governor by the Embassy of Kenya in Tripoli, Libya.

In the MOU there was an expression of desire in both countries to intensify cooperation in various fields of common interest including trade and investment, education, scientific and technical cooperation, transport and communication and energy.

Recent interest shown by Libyan investors in the opportunities available in Kenya was noted, especially in energy as well as hotel and hospitality sectors. There was a reference in the MOU to an expression of interest by Libya African Investment Portfolio (LAP) inter alia to purchase the Grand Regency Hotel, which the Kenya Government had agreed to consider. In our view the MOU was not specifically a directive for the sale of the Hotel.

2. However, what appeared to have enhanced the importance of this MOU, according to the Governor, was the fact that subsequently he was contacted by a Protocol Officer from the Ministry of Foreign Affairs who sent him a press release on the same visit of the President to Libya.

The Protocol Officer later informed him that the Libyan ambassador wished to call on him, which the latter did on 11th September, 2007. The Ambassador during the discussion expressed an interest by Libyan investors to invest in Kenya in general and also in the hotel and indicated that the delegation from Laico would make a follow up meeting to discuss their interest in the Hotel.

On account of the circulation of the MOU, contact by the Protocol Officer and the above visit, the Governor claimed to have concluded that the Government of Kenya had agreed to sell the Hotel to the Libyan investors.

3. The Governor said that Laico was a Government company in Libya under LAP and was registered here as Laico Kenya Ltd. Later, however, he attempted to clarify that Laico was a Libyan Government Company by saying that Laico was a subsidiary of LAP in Libya and Laico was also registered in Libya.

Parent company

As reported elsewhere in this report however, the status of Laico and the relationship with its “parent” Company or the Government of Libya are not clear.

4. The governor reiterated CBK’s position that this was a Government-to-Government transaction because of the MOU and the fact that the Libyan Ambassador had escorted the Laico representatives.

However, it is important to note that no representative of the Government of Kenya was present at any of these meetings, and only CBK officials were present.

The Ambassador did not attend any of the subsequent meetings that were held between CBK and the delegations from Laico. Despite such strongly professed belief of this being a Government to Government transaction, the Governor refused to accept that the Registration of Settlement of 9th April, 2008 in HCCC No.1111/2003 and the Consent Order of 14th April, 2008 in HCCC No. 589/99 had made the Hotel the property of CBK.