Grand regency sale was ‘secret and hasty’

The commission that investigated the controversial sale of the Grand Regency hotel (now Laico Regency) concluded that it was hurried and secret.

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The findings show the sale as having been carried out “secretly and hastily” and indicated Kenyans could have lost billions in the transaction.

The transparency of the deal was also examined by the Cockar team whose conclusion was that at each crucial stage, there were “some not so legal” steps that were taken in order to seal the deal.

The commission’s report has rebutted previous positions that the sale was a government-to-government deal; that the transaction was above board; and that the deal was the best that could be obtained.

The team led by retired judge Justice Abdul Majid Cockar noted that even though the representatives of the Libyan Arab Investment Company Kenya (Laico) met the Central Bank Governor Prof Njuguna Ndung’u together with their ambassador, there was no representative of the Kenyan Government present.

The commission termed Prof Ndung’u’s submission that the  sale was a government deal as a “non-existent and unbelievable excuse” that only “seemed to suggest other motives” in the execution of the controversial sale.

“The excuse enabled him to execute the sale and, with such alacrity and secrecy, get the transfer registered within less than three working days,” it noted.

The report also dismisses the relationship of Laico with the Libyan Government as “unclear”. The commission said there was no way the sale could have been a government-to-government transaction, given the consequent absence of representatives from both the Kenyan and Libyan governments in the meetings between Laico and CBK.

The commission also questioned the rationale of CBK’s selling the hotel when Prof Ndung’u had earlier refused to accept the registration of the hotel as the Central Bank’s property,  even after it was handed over to the Kenya Anti-Corruption Commission by Kamlesh Pattni.

This being the case, the Cockar team notes, “the Government of Kenya had no basis to get involved in this transaction” since the hotel was private property.

The mere fact that a senior CBK staff member--Kennedy Abuga, CBK’s Board Secretary-- went to register the title at the Lands ministry also shows that there was a deliberate attempt to keep the deal under wraps.

“We have considered this matter from different perspectives and find that this transaction was not transparent  and that there was no legitimate excuse (for the sale) to be executed in such secrecy,” the report says. 

The commission says that the flawed process led to the gross undervaluation of the hotel since the same price could have been earned even if the sale had been made 13 years earlier.

“When inflation and the general trend of property values over that time is considered, it should be clear that CBK did not realise the best value for the hotel,” the inquest concluded.