More confusion over Grand Regency price - Daily Nation

More confusion over Grand Regency price

Wednesday September 17 2008

Justice (Rtd) Majid Cockar (right) and

Justice (Rtd) Majid Cockar (right) and commissioner Charles Kirui. CBK legal director Kennedy Abuga said the hotel was sold for $450 million in June. Photo/STEPHEN MUDIARI  


More confusion emerged on Wednesday over the exact amount the Grand Regency Hotel fetched since Central Bank could not ascertain the actual exchange rate against the dollar at the time.

Central Bank of Kenya (CBK) legal director Kennedy Abuga said the hotel was sold for $450 million in June. According to him, the amount translated to Sh2.9 billion since the dollar was exchanging at Sh65 at the time.

But going by this exchange rate, it emerged during the Cockar Commission proceedings that the five-star hotel should have fetched Sh25 million more.

This is what the lawyer for Westmont Holdings, Mr Harrison Kinyanjui, established when cross-examining Mr Abuga after doing his own calculation.

Confidential brief

Again, there was more confusion when Mr Kinyanyui read before the commission a confidential brief the CBK governor Njuguna Ndung’u wrote to the director of Kenya Anti-Corruption Commission (KACC) Aaron Ringera regarding the sale of the hotel to Libyans.

In the brief, Prof Ndung’u pointed out that in their agreement, the Libyans were to buy the hotel at $450 million at a rate of Sh70 per dollar.

So, Mr Kinyanjui observed that going by the governor’s words, the hotel should have fetched Sh3.15 billion. This is Sh200 million more than the Sh2.9 billion it was sold for.

Mr Abuga was, however, unable to explain the confusion.

The hotel was sold to Libyan African Investment Company, sparking controversy as it was argued that the hotel was worth more than that. This is what prompted the President to appoint the commission to investigate the sale.

Retired judge Abdul Majid Cockar is chairing the commission.

Mr Kinyanjui, whose client claims to have paid CBK Sh185 million to buy the hotel before the deal went sour, took Mr Abuga to task over what he described as mystery and secrecy surrounding the whole saga.

The lawyer was referring to letters hotel management wrote to various Government departments, which were sometimes labelled “strictly private and confidential” or “secret and confidential”.

“In the transactions or negotiations (transactions to dispose of Grand Regency Hotel) it was you (Mr Abuga) and the governor who were privy to the fine details relating to the sale of the hotel to Libyans?” asked Mr Kinyanjui.

“The board (the CBK board, which the witness is the secretary) was also briefed,” said Mr Abuga.

“The board was only informed about the general negotiations of the sale. Is it correct?” asked Mr Kinyanjui.

“Yes. It is correct, my Lords,” Mr Abuga said.

The witness, however, said it was only him and Prof Ndung’u who handled the matter on behalf of the bank’s management.

And they liaised with Mr Ahmed Adan, who was acting for hotel owner Kamlesh Pattni and his Uhuru Highway Development Limited.

Asked whether they informed the Treasury about the negotiations, Mr Abuga said: “My Lords, the PS (permanent secretary) Treasury sits on the bank’s board.”

“So, his information would be information enough?” asked Mr Kinyanjui.

I’m not aware

“Correct my Lords. In addition, I am aware the governor was also briefing the minister (former Finance minister Amos Kimunya) but I’m not aware of any formal communication,” Mr Abuga said.

The witness denied there was any sale agreement between CBK and Westmont Holdings.