Leaders allege fresh government plot to auction Sh4.2b Kisumu mall

KISUMU, KENYA: Kisumu leaders have alleged fresh plots by the ministry of Devolution to deliberately delay the payment of a Sh2.5 billion loan used to construct the troubled Lake Basin Development Authority (LBDA) mall.

Nyando MP, Fred  Outa  and  a host of Members of the Kisumu  County Assembly, stormed  the mall on Thursday morning where they claimed  the Treasury released Sh1.5 billion to the Ministry of Devolution in February this year in a supplementary budget aimed at offsetting part of the loan but that is still yet to be effected.

As at January 23, 2017, the loan had accrued interests of Sh388 million bringing the total outstanding debt to Sh2.8 billion according to reports by the Auditor General.

On Thursday however, the leaders said that the ministry of Devolution was now plotting to delay the payment in a move that will see the interests increase and put it at a greater risk to be auctioned.

Outa noted that they received information in parliament that the Treasury had already committed money to offset the loan in two phases with Sh1.5 billion disbursed in this financial year while another Sh1 billion has been lined up in the 2017/2018 budget.

"There is a scheme to deliberately delay the payment of the loan up to the general election, then commission the mall for an auction," said Outa.

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The leaders said that the delay to offset the loan has hampered efforts to operationalize the mall.
"It has come to my attention that some individuals at the Devolution Ministry are working with private investors to sabotage the process of settling the loan," said Outa.

Early this year, Attorney General Githu Muigai raised fears over the status of the mall and urged the Ministry of Devolution to ensure that the loan is paid as soon as a possible.

In a letter dated January 31, 2017, addressed to Devolution CS Mwangi Kiunjuri Muigai noted that to safeguard the property, there is an urgent need to address the loan owed to Cooperative Bank.

"It is our view that the continued delay in honouring LBDA's part of bargain exposes the government/LBDA to legal liability with concomitant loss of public funds," said Muigai.

LBDA management told The Standard that the process to finalize payment of the Sh1.5 billion disbursed by Treasury was on its final stages.

I am currently in Nairobi to work on how the money is paid," said Evans Atera, the acting managing director.

He noted that the mall will be seeking to open its doors in May to help raise revenue that can be used to offset parts of the bill.

Atera said several tenants have already expressed interest in occupying the mall. He said the authority has already signed a contract with Tuskys Supermarket, as the anchor tenant, alongside other investors including Communications Authority of Kenya.

In his report, Auditor General Edward Ouko noted that the delay to open the mall is likely to have a negative impact on potential investors.