State declines to pay Sh5.3b Anglo Leasing debt arrears

By Benson Kathuri

The Government has declined to pay Sh5.3 billion external debt arrears, saying the contracts involved were illegal.

"The $91 million arrears stem from non-payment on commercial credits for security-related contracts, which have been found by Controller and Auditor-General to be fraudulent," said a statement issued by the International Monetary Fund after holding Article IV consultations with the Government, in August.

The contracts are in dispute that may take time to resolve.

"These projects are often referred to as the "Anglo-Leasing" and the authorities are disputing the validity of the claims based on the contracts not being fulfilled," it said

In a detailed report released last Friday, the fund said the Government had obtained an external audit to determine the value of the goods and services provided.

Audit results

However, the statement said the Government intends to renegotiate the amount owed based on the audit results.

Shortly after assuming power in 2003, President Kibaki’s Government inherited high-profiled security-related contracts that were entered under suspicious circumstances.

One of the cases, the multi-billion shilling Aglo Leasing passport scam led to the resignation of the then Finance minister David Mwiraria, while high ranking civil servants were arraigned in court to answer corrupt charges. The scandal involved 18 fraudulent contracts, with payment for goods that were overpriced or not delivered.

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