Anglo Leasing follows President Uhuru Kenyatta to State House

Anglo Leasing follows President Uhuru Kenyatta to State House

By Alex Ndegwa

Nairobi, Kenya: As leader of Opposition in Parliament, President Uhuru Kenyatta gave one of the most eloquent and persuasive arguments against honouring payments related to the shadowy Anglo Leasing contracts.

But eight years later and firmly in State House as Kenya’s fourth President, Uhuru is faced with the contradiction of the same payments having to be paid out on the back of contractual obligations and court decrees.

This has handed the President and his administration the unenviable task of justifying payments for the same Anglo Leasing contracts he once condemned as “a scam” and “a system to continue robbing the country blindly”.

The Jubilee Government’s proposal to pay Sh1.4 billion to settle a claim arising from one of the dubious 18 security-related contracts has stirred Anglo Leasing ‘ghosts’ and split the ruling coalition.

But the latest clamour has an uncanny coincidence with events that led to conception of the Sh55 billion scandal in 2001 and Uhuru’s grim prediction in Parliament on the afternoon of April 5, 2006.

Then, as Official Leader of Opposition, Uhuru had warned that unless the House stopped the shadowy architects of the scam, they would return even in “Governments to come”.

As fate would have it, his Jubilee administration has been the one to pick part of the bills on the table with others waiting in the wings as the as-yet unknown contractors exert pressure that they too be cleared.

“I have no fear in saying that those individuals have no loyalty to this country but to themselves. They existed in the previous government and exist in the current one,” he said, referring to the Kanu regime under which the deals were conceived and its successor, National Rainbow Coalition, whose leaders steamrolled the gravy train.

“Unless this House takes appropriate action, they will continue to exist even in the Government to come,” warned Uhuru, then the chairman of the Public Accounts Committee (PAC), while moving the motion for the adoption of a special audit report on procurement of passport issuing equipment, one of the 18 shady contracts.

Initial Sh600m

In an ironic twist of events, the faceless merchants have returned to raid the public coffers under his administration, which is lobbying Parliament to approve the Sh1.4 billion payout to First Mercantile after a controversial award by a London court.

The Anglo Leasing debt, Uhuru added in 2006, was never approved by the House and had been secured by circumventing the budgetary process under the guise of security.

“This is not about the Government today or the Government yesterday. This is about the lives of 30 million Kenyans and the resources that are put to their disposal, which are currently being misused by a few individuals. This is what this House must put an end to,” he rallied the MPs.

To highlight how the country was ripped off through overpricing, he said the project was supposed to cost Sh600 million but “miraculously”, shot up to Sh2.7 billion. 

“Anglo Leasing is a system that has been used to systematically fleece the taxpayers and the Kenyan public under the guise of security,” he told MPs to thunderous applause, according to Hansard (official records of parliamentary proceedings) seen by The Standard.

“This is a system that, if not brought to check, will continue to rob this nation of the much-needed resources that could be used to better the lives of millions and millions of Kenyans,” he added.

Now President Uhuru finds himself in the tricky position where his government is having to push for the Anglo Leasing payments he had rejected.

Treasury Cabinet Secretary Henry Rotich has said the State’s assets abroad are at risk of being attached to settle the claim, which is also attracting high interest.

Rotich also explains the cases are affecting the issuance of the Sovereign Bond through which Kenya hopes to raise US$1.5 billion to fund infrastructure projects.

Payments blocked

In a legal opinion to the Treasury dated April 3, Attorney General Githu Muigai concluded there are no further legal avenues available to Kenya apart from settling the payments. “Our legal advice is that the republic should accept the negotiated amount which is reasonable as it will result in a discount and save the government from further losses by signing the settlement agreement as drafted,” argued Muigai.

But the Law Society of Kenya, which moved to court on Monday seeking to block Anglo Leasing payments, argues the consent used by the judge to order the government to pay was not signed by lawyers representing Kenya.

LSK argues Kenya can reopen the litigation citing evidence the contracts were corruptly procured. “According to the law, a judgment that forces the people of Kenya to pay for corrupt deals is a judgment contrary to public policy,’’ LSK said in its application through lawyer James Mwamu.

Ironically, Anglo leasing deals were conceived in 2001 under similar pressure for cash and runaway insecurity, as the spate of terror attacks gripping the country today.

Uhuru in 2006 explained to the House that pressed for cash, following suspension of donor support and growing insecurity, Cabinet at a meeting on July 27, 2001 approved the use of lease-financing as the appropriate mode of funding high-projects in housing, transport, and forensic laboratories.

Cabinet also then approved the use of supplier credits for essential security equipment and supplies, he added. “Under the general approval, began a scam; a scam involving a few businessmen, politicians and civil servants. That scam involved over 18 different contracts worth well over Sh55 billion, signed between 1997 and 2003,” he said.

He explained Anglo-leasing related projects “represented three of the most prominent characteristics of corruption in our country”.

“They represent impunity, negligence and recklessness in the management of public resources. They also represent the regrettable feature of lack of responsibility and unaccountable conscience on the part of those charged with the management of national resources that are put under them,” Uhuru argued.

“It is a scam because the basic understanding of what was meant by the use of lease financing to a layman is the fact that because you are short of cash, you go to a financing institution that specialises in lease finance, pay your commitment fee and other up-front payments and then take delivery of whatever good or services you require.

“Upon taking delivery of the goods and services, and as you continue to enjoy them, you are thereafter committed to making your monthly payments plus interest until such time that you have paid your dues to the financing entity in full,” he said.

“Dare I say that none of that was evident in any of those Anglo Leasing-related projects! Despite commitment fees being paid, despite the fact that payments were being made on a regular basis, the Government did not receive the goods and services that it was supposed to be enjoying. The Government did not receive the benefits that it was supposed to receive under the financing arrangements.”

Middlemen

He added: “In a nutshell what was happening was that lease finance companies, many of whom we are yet to prove their actual existence, sprung up and merrily acted as middlemen. They signed contracts with government, received funds from the government and in short slowly passed on some of the money to legitimate suppliers. The suppliers, since they were not part of the initial deals, said: ‘We want our money before we deliver!”’

“So we continued to pay. The so-called finance companies would hive off their chunk and pass it on. In a nutshell, the government was financing itself through a middleman. The government was paying interest on its own monies,” Uhuru told the House.

The PAC chairman said it was difficult to believe the rip-off could have taken place with some junior civil servants and some unknown businessmen being the culprits.

Uhuru said the former Governance and Ethics PS, John Githongo, who had fled Kenya to exile in London, citing threats to his life, provided the missing link in his testimony.

Githongo, Uhuru explained, was able to link the 18 projects to three individuals; Anura Pereira, Amin Juma and Deepak Kamani and relatives. “All those projects were handled by the same individuals. It is therefore clear to us that this was not just a one-off thing. This was something that was developed over time and a lot of thought and energy was put up to create a system to continue robbing the country blindly,” he said.

Anglo Leasing Uhuru Kenyatta Public Accounts Committee