House team in Sh1.2 bn land payout dilemma

Parliament’s Public Accounts Committee is caught up in a legal and political dilemma over whether to approve payment of Sh1.2 billion to two private companies whose land was taken by the government.

Armed with a judgment issued by Justice Alfred Mabeya on February 12, 2012 that they get Sh4 billion and, after negotiating to get Sh2.4 billion, the companies have already pocketed Sh1.2 billion.

Members of the committee sanctioned payment of the remainder of the Sh2.4 billion at a meeting on December 4 but are having second thoughts about the idea, with an influential Nairobi politician sucked into the issue.

At the same time, the committee is divided on whether to go with the Auditor-General’s recommendation to surcharge civil servants who authorised the dubious transactions for which the Kenyan taxpayer was eventually ordered to pay.

Minutes of PAC’s meeting on December 4 last year with top officials from the Interior ministry reveal the intense debate that culminated in MPs giving the multi-million-shilling deal a clean bill of health and advising the Interior ministry to fast-track payment to the two firms, M/S Afrison Export Ltd and Huelands Ltd.

The amount was negotiated down to Sh2.4 billion by the office of the Attorney-General on March 15, 2013 as the country awaited the petition on the results of the presidential election on March 4.

The two firms are the owners of the prime piece of land measuring 96 acres in Nairobi’s Ruaraka area on which the General Service Unit headquarters, the Kenya School of Monetary Studies and the money printing firm De La Rue sit.

The circumstances under which PAC approved the payout have come under scrutiny after some MPs in the committee backtracked on the December agreement saying it was being pushed by the senior Nairobi politician. The flamboyant politician is said to be exerting pressure on the committee to approve the deal even though minutes show that the MPs had already sanctioned payment.

The politician, who is no stranger to big deals and who openly flaunts his power, is understood to have followed the PAC to a hotel in Mombasa where the report on the 2013/14 government’s accounts was being written.

There was, however, no agreement on the matter, with concerns that some of the MPs had met the politician, and the committee decided to get the input of the Attorney-General, Prof Githu Muigai. A meeting planned for Friday this past week did not take place.

The matter takes even greater significance given the numerous cases the government is being forced to settle out of court — through compensation running into billions of shillings — after admitting liability for wrongful acquisition of private land.

Minutes of the PAC meeting chaired by Rarieda MP Nicholas Gumbo reveal how then Interior Principal Secretary Dr Monica Juma took MPs through the processes that led to the government agreeing to pay the two firms the negotiated amount to avoid the pitfalls that could have befallen the government had it reneged on the deal.

Dr Juma: “Hon chairman, the Auditor-General had queried whether there had been valuation, and how the figure of Sh2.4 billion was arrived at. We have provided information on the process that led to the figure of Sh2.4 billion.

We have also provided the opinion of the Attorney-General of October 19. His advice is that we should proceed to pay because of the legal ramifications.

He says on page three of that opinion: ‘This would ensure that we avoid contempt proceedings with a potential to committal of the Principal Secretary to civil jail and exposing the Government to pay the total amount of Sh4 billion plus interest of 14 per cent as ordered by the court on 4th February 2013 at the instance of the decree order.

Therefore, it is our considered opinion that your ministry be advised to deposit the entire balance of the decretal amount in our office to enable us call for the completion of documents and facilitate registration of the entire 38 acres including the 196 maisonettes,” the minutes quote Ms Juma.

(Joel) Onyancha (Bomachoge Borabu): “Hon chairman, it appears that the ministry has an advice from the Attorney-General who explained the attendant consequences if they do not pay. Have they started paying?

Dr Juma: “Hon chairman, payment began in the 2013/2014 financial year. In that year, a total of Sh 1.2 billion was paid in two instalments of Sh600 million each.

Dr Juma goes on to clarify that the initial payment of Sh1.2 billion was spread over the 2013/2014 and 2014/2015 financial years since it had not been factored in the budget.

She also explains how her ministry initiated the out-of-court negotiations with the two firms after the court had awarded them more than Sh4 billion.

Dr Juma: “Hon chairman, the initial ruling of the court was for payment of over Sh4 billion. Of course, we found it difficult to pay, as a ministry. So they applied for a negotiation that led to the deposit of consent in court of Sh2.4 billion. So, it was a consent that had already been deposited in court as the final settlement on the matter.

Onyancha: “What I understand by this is that the ministry has no choice other than to proceed and look for money to clear the balance. Is that the position, Principal Secretary?”

Dr Juma: “Hon chairman, according to the Attorney-General, that is the position.”

Chairman: “What about you? Do you have options for wriggling around?”

Dr Juma: “Hon chairman, the option is for me to go to jail — which is not a good option.” The minutes quote Maara MP Kareke Mbiuki prodding his colleagues to give the deal a clean bill of health in order to save the government from the legal consequences of reneging on the agreement.