Trio rushed to seal deal

The sale of the Grand Regency Hotel to Libyans by CBK was marked by open hostility and withholding of vital information.

The inquiry also heard that senior CBK officials pushed Land Ministry officers hard to speed up the process.

At every stage, it was either the governor himself giving instructions to the Commissioner of Lands Zablon Mabea or CBK legal affairs director Ken Abuga, and lawyer Ahmed Adan, personally supervising the progress of the transactions at Ardhi House.

Excerpts from Cockar Report

The hearing commenced with evidence from the employees of Lands Department, Nairobi. Six witnesses, including Commissioner of Lands Zablon Mabea, gave evidence relating to their roles. The evidence traced the process from the time a transfer document is received at the reception counter, and passes through the hands of each of these officials, to its intended final destination.

We do not propose to analyse the evidence of each of the said employees of the Lands Department. However, what emerged strongly from the evidence was that Mr Kennedy Kaunda Abuga, a Director in the Governor’s Office and a Board Secretary at CBK, and Mr Ahmed Adan of Wetangula, Adan, Makokha & Co, Advocates for the purchasers Laico, particularly Mr Abuga, were present at the Lands offices most, if not all, of the time the processing of the documents progressed from one stage to another. Mr Anthony Matenge ltui the Chief Valuer in the Ministry of Lands, said that on June 20, last year, when he received the file and the documents from the Commissioner, Abuga and Adan came with him to his office. They wanted the valuation of the property to commence at once. It was a Friday afternoon and it was with reluctance that they agreed to wait until Monday 23, for the valuers to go to the hotel for valuation.

The purchase price as shown in the Deed of Transfer was Sh1,850,000,000, but the valuer raised the value in his report to Sh2 billion for stamp duty purposes. On account of pressure exerted on officials of the Lands Department the transfer, after being duly stamped, was registered by noon June 25, last year and the documents delivered to Adan.

From the evidence of the witnesses from the Ministry of Lands, we highlight the following:

a. The transfer documents were not presented at the counter reserved to receive documents for stamping and registration but were handed over to the Commissioner of Lands.

b. On June 19, last year, the Commissioner found a letter in his office from CBK applying for consent to transfer and charge plot No. 209/9514 together with the buildings thereon which formed the hotel.

c. The letter was from Abuga, asking him to call Abuga, or the Governor Njuguna Ndung’u.

d. The Governor on being contacted by the Commissioner told him that he had documents relating to the transfer of the Hotel. He asked that the transfer be registered expeditiously because the transaction involved a Government to Government transaction.

d. On the same day, Abuga went to see the Commissioner with Adan who was representing the advocates for the purchaser, Laico. The Commissioner was informed that CBK had exercised its statutory power of state arising from the charge to which the plot and the hotel were subject.

e. In consequence of the above described visit by Abuga and Adan to the Commissioner, each of the witnesses from the Ministry of Lands was summoned to the Commissioner’s office. They were separately in charge of specific duties relating to the procedural steps before the valuation, stamping and registration of the transfer document was completed. The Commissioner asked them to expedite their part in the registration process.

f. Though Lands officers are supposed to use the Ministry’s vehicles in the course of their work, on June 23, Abuga drove them in his private car from the Lands Office to the hotel. At the end of the valuation inspection, Abuga was waiting outside the hotel to return the officers to the Lands Office in a CBK vehicle.

We have highlighted the above to stress the urgency, secrecy and confidentiality with which CBK desired the registration to be processed.

Mrs Fatuma Sichale, an Advocate of the High Court and the Deputy Director, Kacc gave evidence on the role of Kacc in this transaction. Her evidence was that on October 30, 2003, Kacc, through Kamau Kuria and Kiraitu Advocates filed a suit against Kamlesh Pattni and 16 others, seeking among other reliefs declarations that Uhuru Highway Development Ltd (UHDL) held LR No. 209/9514 on trust to Kacc, and an order for the transfer of the property to Kacc. Kacc also sought orders for the appointment of an interim Receiver/Manager to manage among other properties, the Grand Regency Hotel.

There was a lot of argument regarding whether the suit was filed on behalf of CBK or whether CBK was consulted before the suit was filed. What is not in dispute is that under the AntiCorruption and Economic Crimes Act, Kacc is empowered to investigate the extent of liability for the loss or damage to any public property, and to institute civil proceedings for recovery or compensation.

On May 31, 2004 a consent order was recorded between Kacc on one hand and UHDL and Mr Gitari Njeu on the other whose effect was to remove Njeu as Receiver/Manager and replace him with two joint Receivers/Managers, Mr Hezekiah Gichohi and Mr Peter Ndaa.

There is evidence CBK complained to Kacc and other public institutions about Kacc’s suit and how the case was or was not proceeding. CBK’s concern was that after the joint Receiver/Managers took over the hotel, they did not remit any money to CBK.

Much as the CBK was affected by this suit, it never applied to be made a party to the suit in order to put forward its position or influence the outcome. It was happy to continue raising issues with other public institutions and officials through meetings and correspondence. CBK saw the suit essentially as a problem of Kacc.

As of April 9, last year, on the registration of the Settlement and the public handover, CBK represented to Kacc and to Kenyans that the Hotel had been relinquished to it. It did not disclose to Kacc that it had an earmarked purchaser to whom it was determined to sell the Hotel under its power as chargee.

After the Registration of Settlement, differences emerged between Kacc and CBK on the mode of disposal of the Hotel.

Although initially the Governor agreed with Kacc, he later changed his mind and declared its position to be untenable, and insisted that the Bank would sell the Hotel under its statutory power of sale.

Subsequently, Kacc did not take any active role in the transaction.