Now Pattni plans seven-star hotel

After losing out in the battle for the ownership of the Grand Regency Hotel, Nairobi businessman Kamlesh Pattni has now come up with an even grander project; a seven star Sh4 billion hotel complex just up the road from his former gem that was taken over by Libyans.

But before construction of The Prince begins at Nairobi’s Museum Hill, Mr Patni will have to navigate the controversy over a new 50-year lease agreement on the land on which he intends to build the hotel and shopping complex. The ministry of Lands has controversially given a company linked to him a 50-year lease for the prime property at the city’s Museum Hill, throwing two government ministries at loggerheads.

On November 27, 2008, the Commissioner of Lands, Mr Zablon Mabea, granted the lease to Galaxy Walker Ltd for the building of the seven-star hotel, to be known as The Prince. Under the lease, all buildings on the property, which belong to the Office of the Vice-President and the ministry of Home Affairs, will be demolished and the multi-storeyed structure put up in its place.

Also to be put up on the same plot is a shopping mall, furnished apartments, executive offices and a massive parking lot to accommodate 1,000 vehicles. The ministry of Lands kept the Office of the Vice-President in the dark over the 50-year lease.

The lease was granted to the company four years before the expiry of another lease, granted to yet another company associated with the tycoon. While the ministry of Lands is convinced it has pulled off a major victory for the government, Galaxy Walker Ltd were unable to state where they will get funds for the prestigious twin towers.

It also emerged that the figure given to the ministry of Lands is not the same that the investors want to pump in into the project if and when they start. Questions are now being asked on how Pattni’s company was granted the lengthy lease before the expiry of the previous lease and without competitive bidding for property that has been a subject of court cases since 2004.

The bone of contention is the unilateral decision by the ministry of Lands, led by Ugenya MP James Orengo, to give the tycoon linked to the Goldenberg scandal the prime property when the Office of the Vice-President and ministry of Home Affairs has put a caveat on the property.

Documents in our possession indicate that the land was leased to Tourist Paradise Investments Limited, previously owned by another tycoon, Ketan Somaia. Tourist Paradise Investments Limited, which has been claimed by both Somaia and Pattni, was granted the four acre (1.8 hectares) property by the then Commissioner for Lands Wilson Gacanja on September 22, 1994, for a period of 19 years.

The property, which sits at the intersection of Museum Hill round-about and Muthithi road, was under lease to Tourist Paradise until November 2013 at an annual rent of Sh6.3 million. But in the new lease, which has been defended by top ministry of Lands officials, Pattni’s company is paying only Sh1.6 million as annual land rent.

It is not known why the government has drastically reduced its land rates for the company, but Mr Mabea told the Saturday Nation that the government was getting “value for its property”. The Commissioner for Lands said the Pattni company had been granted an extension to lease the land for 50 years as a matter of priority as it was the one holding the previous lease.

“The extension was given last year (2008) after they made a proposal to the ministry, which was in line with vision 2030 and job creation,” Mabea added. He said the project presented by Galaxy Walker Limited would run into Sh2 billion and should have taken off last December.

“The mall and hotel project should have started last December but the company had problems with some tenants moving out,” the Commissioner of Lands said. The Permanent Secretary for Lands, Ms Dorothy Angote, also defended the lease granted to Pattni’s company saying the person on the land in question is usually given first option when a lease expires.

“If you own a house in Nairobi and your lease expires, you get first option for renewal,” Ms Angote said. The PS said she did not know that the company given the lease was associated with Pattni, noting that the ministry had only dealt with the company without delving on who its directors were.

“We are continually renewing leases and we don’t check who the directors of companies are,” Ms Angote added. She said the company had presented an impressive business proposal, which had led to the ministry renewing their lease. “Whoever is complaining should apply to the office of the Commissioner of Lands but they must have a better and more serious plan”, the PS added.

The PS insisted the lease was not lengthy as the ministry renewed leases for between one year and 99 years. Investigations by the Saturday Nation, however, show that the 50-year lease is the longest that the government had ever given to any company since 1968.

The lease that was given to Tourist Paradise Investments Limited On October 1, 1968, was for a period of 15 years. On December 10, 1982, the then Commissioner of Lands, James Raymond Njenga, granted Tourist Paradise Investments Ltd a lease of seven years.

However, it is the decision to give Pattni’s company a longer lease by the Ministry of Lands that is raising eyebrows. At Jogoo House, where the Office of the Vice-President and ministry of Home Affairs sits, the PS, Prof Ludeki Chweya, was shocked to learn that the ministry of Lands had granted the Pattni company a lease on the land yet it had put a caveat on the property.

The caveat, dated April 21, 2005, cautioned that the property, LR 209/7437 (International Casino), situated at Museum Hill, was not free for sale, sub-division, hiring or otherwise. “Further take notice that any person or company who attempts to sell, sub-divide or sublet the property risks to be prosecuted,” the notice warned.

The notice also warned that anyone who trespassed on the property risked to be prosecuted. This was a position which was reinforced by Prof Chweya, who said: “The ministry’s position has not changed.” The PS conceded that there were many players involved in the land, whose LR number has changed to 209/18866.

What remains mysterious is how the ministry of Lands could ignore a caveat placed by another ministry on its property. On August 30, 2004, the then Commissioner of Lands, Ms Judith Okungu, in a plaint in civil case 954/2004, sought the court’s authority to terminate the contract between the government and Tourist Paradise Investments Ltd and the National Industrial Credit Bank (NIC).

The bank had granted Tourist Paradise a Sh60 million loan using the property as collateral without first obtaining written consent of the Commissioner of Lands. Ms Okungu further said in her plaint that Tourist Paradise Investments Ltd were in arrears totalling more than Sh76 million and sought the court’s authority to re-enter the land and repossess all the buildings and equipment.

A brother to Pattni confirmed that the government had granted Galaxy Walker Ltd a 50-year lease for the property but was “surprised” that there was a caveat on the land by the Office of the Vice-President. “A caveat? I will check and let you know,” Mukesh told the Saturday Nation during an interview at a Nairobi hotel.

He said the Tourist Paradise Investments Ltd had cleared a Sh90 million debt as a result of accumulated rent arrears for the Museum Hill property. Mukesh said Galaxy Walker Ltd intended to construct a Sh4 billion project that will take a maximum of three years to complete.

He shared drawings and an architect’s impression for the grand project but would not divulge how they intended to raise the money. “We have investors from Dubai who are expected in the country this Friday,” he responded when asked where the money to put up the project will come from.