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Tenants keep off Lake Basin Mall amid probe

Monday July 22 2019

The new Lake Basin Mall

The new Lake Basin Mall located at the Mamboleo junction in Kisumu. Tenants have been shy of taking up occupancy amid an ongoing investigation targeting Lake Basin Development Authority officials. PHOTO | FILE | NATION MEDIA GROUP 

WALTER MENYA
By WALTER MENYA
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With nearly 60,000 square metres of space and its excellent location at the Mamboleo junction on the Kisumu-Kakamega road, expectation was high that the expansive the Lake Basin Mall in Kisumu would help improve the economy of the lakeside city.

Yet, since it opened its doors in March, little activity has been going on at the mall owned by Lake Basin Development Authority (LBDA) and occupancy remains low and has become the subject of claims, counter claims and an investigation by the Ethics and Anti-Corruption Commission (EACC), which is now in its sixth year. A certificate of practical completion had been issued earlier on April 19, 2016.

Despite a number of government ministries and agencies explicitly giving the mall a clean bill of health, the combination of the ongoing investigations and the dispute between the contractor, Erdemann Property Ltd, and the government over Sh645 million the former is demanding as financial has meant that prospective tenants have kept off due to the uncertainty that prevails.

COMMERCIAL LOAN

The other outstanding issue between the contractor and the government concerns the issue of LBDA taking up the Sh2.5 billion bank loan that Erdemann took to construct the mall. In the agreement, Erdemann was financing 80 per cent while LBDA was financing the remaining 20 per cent. But, upon handing over the mall, LBDA was to take over the commercial loan.

“The combination of an endless investigation by EACC and lack of authorisation to pay the contractor costs that have been ascertained has resulted in constant negative publicity which is the reason the mall is not yet full,” said Cavince Owidi, the LBDA board chairman.

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EACC started its investigations into the development of the mall in 2013. Commission spokesman Yasin Ayila told the Nation that the investigation file was forwarded to Director of Public Prosecutions Noordin Haji about two weeks ago.

In June, the commission conducted coordinated raids at the homes and offices of current and former staff and board members of LBDA. Among those targeted were former chairman and current speaker of Kisumu County Assembly Onyango Oloo, former managing directors Kabok Aguko and Dr Evans Atera, and a host of LBDA senior officers. Current board chairman Cavince Odoyo Owidi’s office was also visited by the investigators. Also in the EACC radar was Erdemann Property Ltd who was the contractor for the Sh4.2 billion project.

SH230 MILLION

Meanwhile, correspondences and reports by various government ministries and agencies reveal a situation where no one wants to give express authorisation for the monies owed to the contractor to be paid even though almost all of them speak highly of the mall’s viability.

The State Law Office, the Auditor General, the Ministries of Devolution and East Africa Community & Regional Development as well as the Auditor General have had positive remarks with regard to the viability of the mall.

In a January 2017 special audit, Auditor General Edward Ouko noted that assessments show that the mall will generate “at least Sh230 million per annum making the project viable.” Among tenants who have booked space are Communications Authority of Kenya, Kenya Revenue Authority, Bata Shoe Company, Premier Lounge and Best Western Hotels, which plans to run a three-star facility.

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