We will not pay any money to Anglo Leasing firms: Ruto

Deputy President William Ruto has dismissed criticisms from Coalition for Reforms and Democracy (Cord) leaders over the government’s intention to pay Sh1.4 billion to settle Anglo Leasing claims arising from unhonoured contracts signed in 2002.

He said the government was not ready to pay even a single cent to settle the Anglo Leasing cases as had been alleged by members of the opposition.

“Not a single cent has been paid or will be paid as claimed by Cord. Those in the opposition were the architect of the Anglo Leasing scandal and are making the loudest noise. They should allow us to sort the mess they created. There’s no room for corruption in the government,” Mr Ruto said in Kiambu on Saturday.

“Although there is a court order on Anglo Leasing payment, we have resolved as a government to let Parliament decide. That’s the only transparent way to deal with Anglo Leasing.”

His sentiments come days before an expected showdown in Parliament as lawmakers prepare to debate a government proposal to have payments for Anglo Leasing contracts honoured.

The payment followed two cases pitting First Mercantile Securities Corporation (FMSC) against the Republic of Kenya and Universal Satspace (USS) versus the Republic of Kenya.

The chairman of the Parliamentary Committee on Budget Mutava Musyimi said that what was before the House was a figure of Sh1.4 billion.

The figure arose from two contracts signed by the Ministry of Information and Transport on July 11, 2002 for the purchase and supply of satellite telecommunication equipment and communication network for Postal Corporation of Kenya (PCK), at a contract price of $11,787,000 (Sh1 billion at the current exchange rate).

The purchase was to be bankrolled through a Financing Agreement with FMSC, which authorised the firm to pay the suppliers on behalf of the Kenyan government to discharge its obligations under the purchase contract.

The contract provided a penalty annual interest rate of 8.75 per cent for any delayed payment. The contracts were implemented until August 2004 when the government suspended further payments in all security related contracts following the Anglo Leasing saga.

In January 2006, FMSC filed a claim against the government in the Geneva Tribunal of First Instance claiming $12,716,250 (Sh1.1 billion) plus penalty interest at an annual rate of 8.75 per cent for breach of contract.

The second case was filed in the Court of Justice in England in July 2006 by Universal Satspace claiming $12,366,816 (Sh1.1 billion) in respect of the contract for the supply to the government, through the PCK, bandwidth spectrum and network operation and control services for 10 years.

Universal Satspace Company and First Mercantile Securities Corporation had managed to successfully sue Kenya over the contracts at the International Court of Arbitration, London and in Geneva, Switzerland, respectively.

A section of lawmakers have said that the money should be paid to prevent the country’s assets from being attached and to stop further accumulation of interest that may make the debt unsustainable. The settlement will also pave the way for Kenya to raise Sh130 billion ($1.5 billion) in a planned inaugural sovereign bond from the international market, according to Mr Musyimi, the Mbeere South MP, who also chairs the Budget and Appropriation Committee.

Cord MPs are opposed to the plan saying it may open an avenue for more claims for payments from contractors or suppliers. The Senate Finance Committee is also opposed to the idea with its members expressing fear the government was out to use its majority representation in Parliament to endorse the transaction.

The committee chairman Billow Kerrow (Mandera, URP) and Kakamega Senator Boni Khalwale (UDF) have read mischief in the saga. “We should know who owns these companies and be taken through the defence that the Attorney General presented before the foreign courts that were interrogating this matter,” Mr Khalwale said.

“We borrow to finance the country’s activities yet they want to pay shadowy companies,” Mr Kerrow said. National Assembly Speaker Justin Muturi, however, defended Parliament’s wish to re-look at the matter.