Anglo-Leasing navy ship set for Kibaki launch

A Sh4.6 billion Kenya Navy ship linked with the Anglo-Leasing scandals is set to be launched by President Kibaki after docking in Mombasa next week.

An official at the Department of Defence on Tuesday evening confirmed to the Nation that the ship was expected in Mombasa and would be launched shortly after by the President.

“Yes, I can confirm that the ship will arrive next week, most probably on Monday. It will be launched the same week,” said the official.

However, the source declined to divulge more details.

The ship will be launched nine years after the supply contract was signed and after years of controversy on being linked to a series of suspect security procurement scandals exposed by former Governance and Ethics permanent secretary John Githongo. (READ: Government may have sunk more money into navy ship)

The Department of Defence contract with Euromarine Industries of Spain was listed by a number of reports as one of the 18 suspect security deals generally referred to as Anglo-Leasing scandals.

Under the deal signed on July 15, 2003, Euromarine was contracted to deliver an oceanographic survey vessel to the Kenya Navy for close to Sh4.6 billion.

On the same day, two financing contracts were also entered into with two Spanish firms. At some point, Euromarine sub-contracted the ship’s construction to another Spanish firm known as Astilleros Gondan.

Suspicious deals

However, payments for the contract were stopped in June 2005 after Mr Githongo blew the whistle on the suspicious financing deals.

The supplier then sued the government for withholding payments for the vessel which was dubbed “Kenya’s Spanish Armada” by former British High Commissioner Edward Clay.

But the government resumed negotiations in September 2006 after the parliamentary Committee on Defence and Foreign Relations gave the contract a clean bill of health.

The committee, then chaired by Mr GG Kariuki, had gone on a fact-finding mission in Spain and held meetings with the suppliers before preparing its report.

Its findings, however, drew criticism from civil society groups, particularly anti-graft watchdog Mars Group led by Mr Mwalimu Mati.

Previous damning reports on the deal included those prepared by the Controller and Auditor General (April 2006), the Parliamentary Accounts Committee (March 2006) and the Ministry of Justice and Constitutional Affairs (September 2006).

A report tabled in April this year by the parliamentary Committee on Defence and Foreign Relations showed that the Treasury had  provided €10.2 million (Sh1.2 billion) in the Supplementary Budget as part of the terms of settlement agreement between the government of Kenya and suppliers, Euromarine.

The committee, chaired by Wajir West MP Adan Keynan, said the remaining balance of €26.9 million (Sh2.8 billion) would be provided for in the financial year 2012/13 budget.

“The withheld payments also  generated political pressure on the Treasury, including, according to Githongo’s report to President Kibaki of November 2005, direct requests to him by two ministers,” says a Mars Group report published in 2007.

The report, titled The Navy Ship Deal: Asking the Tough Questions about The GG Kariuki Report on the Kenya Navy Ship Contract, said that the parliamentary committee did not provide any basis for clearing the public officers and commercial entities involved in the deal. (READ: House team approves Sh2.8bn for navy ship)

“It (the Parliamentary committee report) makes no mention of the KACC investigation of Euromarine and its co-financiers. It makes no mention of the reports by the Public Accounts Committee, the Controller and Auditor General or the Githongo report.”

In the unending circus surrounding the vessel, Euromarine in February 2008, wrote to Head of Public Service Francis Muthaura complaining that the government had stalled payment and threatened to sell the ship.

It was then that reports surfaced that middlemen had brokered a deal for Nigeria to purchase the ship at Sh5.2 billion.

Fears have also been expressed that the vessel, which has been docked at a shipyard in Spain since 2005, was rusting away with most of its parts reportedly malfunctioning.