AG, Rotich differ on status of Anglo Leasing cases

Monday January 30 2017

Attorney General

Attorney General Githu Muigai (right) attends the launch of an application for crime reporting on January 24, 2017. A staff in his office has said there were no pending Anglo Leasing cases in the courts. PHOTO | DENNIS ONSONGO | NATION MEDIA GROUP 

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The Office of the Attorney-General has disputed a claim by the National Treasury that Anglo Leasing companies have filed four cases in Europe in which they are seeking Sh16.6 billion from the government.

A well-informed official in the AG’s Chambers, which defends suits on behalf of the republic, said there were no pending Anglo Leasing cases in the courts.

This contradicts a claim by the Treasury Cabinet Secretary Henry Rotich, who in a report submitted to Parliament last week, claimed that the country could be forced to pay Sh16.6 billion if it loses cases filed by owners of Anglo Leasing-type companies over the country’s refusal to honour the contracts, which were awarded irregularly.

In the report on Kenya’s annual public debt management, Mr Rotich gave a breakdown of the 18 Anglo Leasing projects and said four firms that were contracted had filed cases in London, The Hague and Geneva seeking to have the government pay them.

The Treasury, however, said the loss of billions of taxpayers’ money was unlikely, since the government had engaged “reputable and experienced international law firms to represent its interest.”

The cases are being handled in courts or arbitrations in the UK, Netherlands and Switzerland, he claimed.

“The government is committed to resolving the dispute on the outstanding external commercial debts on the basis of fair value received by the government on each contract as determined by independent valuers and based on legal advice,” said Treasury, which did not name the firms in court or their directors.

On Sunday however officials at the AG’s Chambers who handle such cases denied the existence of the four cases in the Anglo Leasing dispute, saying that two disputes which had been taken to court had been settled.

The first involved the Sh1.4 billion which was paid by the government in 2014 to pave way for Kenya to float the Eurobond after creditors threatened to seize property in embassies abroad and file a suit to block the bond.

“The first case was filed in Geneva and later moved to London. This was settled when the government paid out before the floatation of the Eurobond,” said the official who sought anonymity because he is not authorised to speak on behalf of the State Law Office.

The second case, he explained, was between one of the contractors and the Minister of Internal Affairs, which was also settled out of court.

The official questioned the source of information on which Mr Rotich based his report to Parliament.

“We have no record of the cases Treasury is talking of. The position of the State Law Office is that there were only two cases,” he said.

Originally there were 18 Anglo Leasing-type contracts, whose payments were suspended in August 2004 and the Auditor General asked to carry out a special audit.

Of the 18, 11 were in dispute, three had been fully paid for but related to projects in dispute and in four, the creditors had returned all funds paid by the government.

The Sh16.6 billion arises from seven of the 11 contracts as four were successfully resolved.

And because they were related to the provision of equipment for security, the contracts were treated as secret.

Anglo Leasing was not just about a few contracts, but a conspiracy that involved collusion between business people, politicians and top bureaucrats to fleece the public through inflated invoices or contracts against which no goods or services were delivered.

Since the owners of the Anglo Leasing companies are still in business, the fear has always been that they could find their way back into corruption.

Mr Rotich said that apart from putting in place a strong legal framework on public procurement and starting reforms in the public financial management systems, the government would put in place legal measures to recover from the Anglo leasing firms any payments in excess of the real cost of the contracts.

“Four of the 11 contracts in dispute have been successfully resolved. Resolution of the remaining projects is on-going.

"To achieve this, there will be enhanced coordination between the Office of the Attorney General, the Ethics and Anti-Corruption Commission (EACC), the Directorate of Public Prosecutions (DPP) and the National Treasury,” Mr Rotich said in the report.

Described as the biggest scandal under President Kibaki’s administration, the Anglo Leasing scandal has often returned to trouble the Jubilee administration.

In 2014, President Uhuru Kenyatta authorised the Treasury to pay Sh1.4 billion to two Anglo Leasing-type firms that had won judgments against Kenya.

The payment was also meant to demonstrate Kenya’s willingness to fulfil its obligations and reassure investors ahead of the issuance of the $2 billion Eurobond.