President Kenyatta orders Sh1.4bn pay to Anglo Leasing

President Kenyatta has authorised the National Treasury to pay Sh1.4 billion to two Anglo Leasing-type firms that had judgements against Kenya.

State House announced late Thursday evening that Mr Kenyatta had also ordered fresh investigations into the cases around the suspect security and information contracts which State House described “as a thorn in the flesh of the Kenyan nation”.

“Government has today, therefore, authorised the Cabinet Secretary, National Treasury, to pay the judgement debts with immediate effect,” State House Spokesman Manoah Esipisu said.

The news had first been broken to members of the Budget and Appropriations Committee of the National Assembly, which had visited State House to get the President’s views on the Budget for the next financial year.

The committee’s members had, in April, prepared a report with their Finance counterparts asking the National Assembly to approve payment of the debt to First Mercantile Securities Corporation and Universal Satspace.

But this backfired after Jubilee Coalition MPs rejected the idea and vowed to throw the report out. They joined their Cord counterparts who had taken a similar stand.

“He told us he gave instructions this (Thursday) morning,” said Isaac Mwaura (nominated, ODM). “But he has given very good reasons and I bought his idea. He means well.”

Mr Esipisu said that when Mr Kenyatta was chairman of the Public Accounts Committee as opposition leader, he investigated the matter “and he agrees with the views of a majority of the Kenyan people on this. That’s why it has taken long to make a decision on the current situation.”

But the President, he said, has had to make a painful decision on what is the greater evil: either the money or put the country’s economy at risk.

“By making this payment, the President is not legitimising what he and many Kenyans believe to have been a series of fraudulent transactions,” the statement said.

“Therefore, the President has ordered fresh investigations into the cases.”

He said investigations would be left to the Ethics and Anti-Corruption Commission, but Parliament also ought to play a role.

“It is now up to these responsible agencies to ensure that Kenyans get restitution. Our institutions failed Kenya in these cases previously. Kenyans would not welcome further failure in the context of these cases,” Mr Esipisu said.

ASSETS ABROAD

The State House statement said the government decided to settle the debt because of the rising interest rates, to protect Kenya’s reputation as a country that meets its contractual obligations, to protect Kenya’s assets abroad and maintain the country’s current credit rating. (READ: Kenyans risk paying Anglo Leasing more)

Top on its reasons was that the two firms have applied to international courts seeking to enforce the judgement and attach Kenya’s assets abroad.

Also, Mr Esipisu said, all legal avenues to challenge the case had been exhausted.

“The Attorney-General as well as an independent international legal firm, Dentons of UK, has advised that there is no legal avenue left for the government apart from settling the payments,” he said.

The National Treasury had told MPs that Kenya needs to issue its first international sovereign bond to shore up the Budget for the coming financial year.

This cannot happen unless all obligations related to the court awards are paid. 

“The claimants have threatened to have international courts attach the bond proceeds until the judgement debts are settled,” Mr Esipisu said.

With the issuance of the bond caught up in these issues, the Treasury said, the implementation of the Budget would be at risk.

“It is estimated that the annual costs of non-settlement would be Sh21 billion, being the cost of higher interest rates on domestic borrowing both for the public and private sectors. Therefore, given that the cost of paying the judgement debts is Sh1.4 billion, this means that the benefits of settling them outweigh the costs of non-payment by 15 times,” said Mr Esipisu.

This means that Parliament will to be asked to make their approval when the National Assembly resumes sittings on June 3.

The full statement can be read here.