Foreign ministry intervened to lift accounts freeze

By David Ochami

Four months after the imposition of UN Security Council resolutions calling for travel bans on key Libyan officials and freeze of assets of Muammar Gaddafi’s regime, Kenya is not in a hurry to implement them.

Key authorities at the Central Bank of Kenya and the Ministry of Foreign Affairs that should be involved in the implementation of the resolutions remain non-committal about what Kenya will do.

However, The Standard on Saturday has learnt key officials in the Kibaki administration with close ties with the Gaddafi regime could have dithered with the implementation and opted to hide behind the Africa Union declarations that followed the sanctions.

The Standard on Saturday has also learnt that following an internal memo to all commercial banks from Central Bank Governor Njuguna Ndung’u, who featured in the controversial sale of the former Grand Regency in 2008, the Kenya Commercial Bank where the Libyan embassy in Nairobi banks froze several accounts only for them to be reopened after the intervention of the Foreign Affairs ministry and other officials.

Meanwhile, reports show that finding Libyan assets in Kenya, especially liquid assets, is not easy since nominees hold some or these firms have been reregistered in third countries after being incorporated in Kenya.

It is not clear what amount of money was held in the Libyan accounts at the KCB, but it is believed some were maintained for operations of the Libyan embassy in Nairobi. The frozen and unfrozen amount was not disclosed.

CBK caution

Although the CBK refuses to discuss this matter, the Foreign Affairs ministry and the Kenya Bankers Association admit that about two months ago, CBK issued some advice on how to deal with Libyan monies in Kenya in the wake of the resolutions.

"I am aware that Central Bank has urged banks to be vigilant and to exercise due care when handling any instructions received from Libyan institutions," says Habil Olaka, the CEO of the Kenya Bankers Association.

He argues the communication from CBK was "not instructions to freeze or close down accounts".

Nevertheless, an official at KCB issued instructions freezing the accounts in fulfillment of the Governor’s letter, prompting the Libyan embassy to immediately run for help at the Foreign Affairs ministry.

Acting Foreign Affairs PS Patrick Wamoto admitted in a recent interview that "KCB froze the accounts but we told them to unfreeze them" because the ministry did not think these monies was covered by UN Security Council resolutions 1970 and 1973.

Apparently, the freeze followed what Mr Wamoto says was a letter from CBK asking all commercial banks to exercise "due diligence" with Libyan assets.

Wamoto says the "embassy accounts were not really covered by the Security Council resolutions in our view" and argues further that seizing these assets would imply Kenya had severed diplomatic links with the Libyan government.

Legal opinion

But apart from this rationale, Wamoto tends to suggest that the Kibaki establishment was doing nothing pending a legal opinion of the application of the resolutions by the African Union’s Legal Commission.

He said the AU Peace and Security Council referred the matter of interpreting the resolutions based on the thought they were contentious and tended to treat Libya unfairly.

But he also disclosed in a recent interview that tracking Libyan assets in Kenya is not easy "because it is quite difficult to know what is Libyan and what is not" because some of the properties also include Kenyan and non-Libyan shareholding while some assets have been reregistered in third countries after being incorporated in Kenya.

Wamoto’s argument confirms Olaka’s assertion that there is no real policy by Kenyan authorities to apply the sanctions. Wamoto says his ministry communicated the resolutions to all relevant departments of Government, but is unclear whether the Government or CBK have made any report of progress to the UN’s sanctions committee.

Meanwhile, Olaka argues CBK’s advice did not include an order to freeze accounts, adding that the Governor’s instructions were "reiterating the necessary vigilance as per the laid down procedures for countering money laundering and terrorism financing".

But he was categorical that the Kibaki regime is yet to "implement or give effect to the UN resolutions". He was also categorical that in the absence of any direct policy, any banks taking action on Libyan assets "would only take such actions…for administrative reasons but not by operation of the law".