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MPs reject report on duty free shops at airports

Wednesday May 24 2017

Duty free shops at the Jomo Kenyatta International Airport. FILE PHOTO | SALATON NJAU

Duty free shops at the Jomo Kenyatta International Airport. FILE PHOTO | SALATON NJAU | NATION MEDIA GROUP

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MP have swiftly rejected the report of the Public Investments Committee on duty-free goods’ shops at Kenya’s airports, siding with lawyers who argued that adoption of the report would make it easy for Kamlesh Pattni to be paid Sh17.15 billion.

Debate on the report was concluded last Thursday, leaving the matter to be put to the vote on Wednesday afternoon, and Speaker Justin Muturi declared the Nays had won after their shout was louder than that of the Ayes.

The rejection of the report in the swift vote marks the end of another chapter in the long-running fight for control of the shops at Kenya’s international airports where duty-free goods are sold.

Debate on the report was stopped on the evening of March 2 after Deputy Speaker Joyce Laboso read out a letter to the National Assembly by Kenya Airports Authority (KAA) lawyer Fred Ngatia through the firm of Ngatia and Associates.

In the letter, the lawyer had said: ““The report is intended to validate bogus claims by Kamlesh Pattni which are the subject matter of pending cases at the High Court.”



Dr Laboso appeared to have been wrong in stopping the debate as Mr Muturi later declared that the letter had come in too late given the Public Investments Committee had tabled its report — more than a year back, in December 2015 nonetheless — and there was no more opportunity for making submissions on the matter.

When debate on the report resumed last Thursday evening, only three MPs —Murang’a Woman Representative Sabina Chege, her Nyeri counterpart Priscilla Nyokabi and PIC chairman Adan Keynan — contributed to debate. All of them were in praise of the report.

Said Mr Keynan: “Despite many threats and intimidation, they (PIC) decided to put their feet down and come up with one of the most authoritative reports that will not only save the taxpayers of their monies, but will also protect, promote and jealously defend the image of Kenya as a premier nation.”

He told the handful of MPs in the House at the time that adoption of the report would change the face of the country’s two major airports — Jomo Kenyatta in Nairobi and Moi in Mombasa — and the “administrative and governance structure of KAA as a critical quasi Government agency.”

PIC was of the opinion that it had sealed all avenues through which the firms fighting with the KAA, most of which are associated with Mr Pattni, would be paid.


This would arise from domestication of the ruling by the International Centre for Settlement of Investment Disputes based in Washington DC that found the lease between the government and World Duty Free was shrouded in bribery and was therefore illegal.

The catch was in the subsequent recommendation that the government should work with KAA to amicably settle the award through arbitration of Sh4.3 billion to World Duty Free, one of the companies involved.

PIC also asked for joint assessors to be appointed by KAA to evaluate the losses from the eviction from Jomo Kenyatta International Airport (JKIA) of the duty free shops in 2013.

This was to determine the credibility of the claim of Sh7 billion by the shop owners, meaning the owners would still be paid.

“KAA should expeditiously conclude all the global settlement agreements between it and World Duty Free/Dubai Duty Free and other duty free shops operators in order to save the Kenyan taxpayers costly litigation fees,” PIC concluded.


It also recommended the investigation of former KAA chief executive Lucy Mbugua, legal counsel Victor Arika and other present and past officials it accused of designing flawed contracts between KAA and duty free shop operators.

It recommended that former Transport and Infrastructure CS Michael Kamau be held individually responsible for failing to follow through on an agreement that would have settled the cases for good.

“This failure has exposed KAA and the Kenya tax payer to a contingent liability of not less than Sh17.15 billion,” it concluded.