Kenya wins Sh6.24 trillion mining licence dispute

A Canadian company that used political connections and boardroom manoeuvres to get an exclusive mining licence for Sh6.24 trillion (US$62.4 billion) worth of minerals in Kwale County has lost its attempt to bulldoze the government to reinstate the permit — ending what had turned out to be the biggest auction of Kenya’s natural resources in history.

The case by the Canadian company has exposed what had gone behind the scenes in the quest for an exclusive licence.

CIRCUMVENT

Cortec Mining Kenya (CMK) Limited, whose local face was controversial tenderpreneur Jacob Juma, had sued the government at the International Centre for Settlement of Investment Disputes arising out of a mining project at Mrima Hill said to contain one of the world's largest undeveloped niobium and rare earth deposits.

Mr Juma, who was later killed in May 2016 by unknown people, was — according to the government — brought into the Canadian company’s board “to circumvent the legal obstacles and procure a mining licence illegally” during the transition between President Kibaki and Jubilee government.

BUREAUCRATIC

But Cortec director David Anderson told the tribunal that he engaged a Nairobi law firm, Robson Harris, to help him navigate the political landscape and that is when he received a call from Jacob Juma in February 2013.

Mr Anderson told the tribunal that Mr Juma informed him that CMK's licence application was being “blocked somewhere in the State's bureaucratic system.” He offered to assist CMK in discussion with government officials and in turn he would be allowed to buy shares in Pacific Wildcat Resources Corp, which owned 100 percent of CMK, Cortex UK and Stirling Capital.

REPRESENTATIVES

It was a lucrative deal and Mr Juma was to become “a significant investor”, according to Mr Anderson. So fast was Mr Juma that two days after the general election, on March 6, 2013, he was able to arrange meetings with Mr Francis Kimemia, then Secretary to the Cabinet, and other representatives from the outgoing Kibaki government.

Besides Mr Anderson, Mr Juma and Mr Kimemia, others who attended the meeting included Mining Commissioner Moses Masibo and Environment and Mineral Resources permanent secretary Ali Mohammed. The other was Cortec chairman Donald O’Sullivan.

AUTHORITY

Mr O’Sullivan and Mr Anderson told the tribunal that it was at this meeting that Mr Kimemia asked Mr Masibo “what the legal position was regarding his office issuing a special mining licence” to Cortec.

Mr Masibo said it was within his “power” and had “full authority to issue CMK a special mining licence, including for a period of 21 years.”

Mr Kimemia then told Mr Masibo that if he was satisfied, he could issue CMK the special permit. Commissioner Masibo indicated that he “was satisfied and that he would proceed accordingly,” according to court records. Apparently, and the tribunal has said as much, Mr Masibo had no such authority.

SHAREHOLDING

But the following day, a press conference was held at Fairview Hotel in which Mr Masibo announced that he would give Cortec a special mining licence.

On the day that Kenyans were focused on the start of an election petition between Jubilee’s Uhuru Kenyatta and former Prime Minister Raila Odinga against the March 4 election of Mr Kenyatta, Mr Masibo handed over the license to Cortec, giving away Kenya’s most lucrative mineral field to a Canadian firm. In return, for his effort, Mr Juma was given 30 percent shareholding in the firm in a classic case of high level corruption.

CONNECTIONS

The mining licence, SML 351, was subsequently published in the Kenya Gazette on March 22, 2013 — which was a week before the Supreme Court declared that President Kenyatta was validly elected. It was a big victory for Jacob Juma, and his associates, for they now had a hand in Cortec mining company and an entry point to niobium mineral of over 100 million tonnes and additional 30 million tonnes of rare earth minerals that could sustain the project for 20-30 years.

In order to show the Canadian firm that he had connections in high places, Mr Juma organised to see the new President at State House, Mombasa — where he had taken rest after a tortuous campaign and court battle.

SALES PITCH

On April, 26, 2013, 17 days after President Kenyatta was sworn-in for his first term, the Canadian directors of Cortec were driven to State House Mombasa for a “courtesy call” — or what Isaiya Kabira, the outgoing head of Presidential Press termed as a “sales pitch”. Present was Interior PS Mutea Iringo and the Commissioner of Mines Moses Masibo. Others were Jacob Juma, Mr David Anderson (CMK managing director), a Miss Jacqueline O'Sullivan, Mr Don O'Sullivan (CMK chairman), Mr Darren Townsend (CMK director).

ALLEGATIONS

While Mr Kenyatta told the group that his government would support a vibrant mining industry, the Canadians took that to be an approval. But Mr Kabira would tell the tribunal that Mr Kenyatta’s “comments were of a general nature and expressed his government's policy towards the mining sector.”

During the tribunal, Mr Anderson testified that on July 8, 2013 he was told by Mr Juma that the new Mining CS Najib Balala had threatened that, unless CMK paid him Sh80 million he would revoke the licence. Mr Balala was not called at the tribunal to deny those allegations.

RESOLUTION

Mr Balala not only cancelled various mining licenses issued during the transition period but on August 23, 2013, he formed a task force headed by Mr Mohammed Nyaoga to look at all the licences.

But rather than present its case, Cortec initiated discussions with Deputy President William Ruto aimed at a political resolution of the dispute over SML 351. CMK also commenced judicial review proceedings in the Nairobi High Court, and its lawyer Havi & Co Advocates said the company would not participate in the proceedings.

LITIGATION

At the political front, Jacob Juma was not lucky and the High Court also ruled that a mining licence could not be validly issued before an Environmental Impact Assessment approval had been issued. .

Mr Masibo told the Dubai-based tribunal that he issued the license “under pressure from the politicians and Cabinet officials and out of fear of litigation.”

But the tribunal, while throwing out Cortec’s petition, said the firm had no license in law.