How dubious pacts could cost Kenya Sh334b

Trade Principal Secretary Chris Kiptoo blames vague language in investment treaties for predicament [Peter Ochieng, Standard]

Taxpayers could soon fork out Sh334 billion to several foreign investors, thanks to several defective treaty negotiations by the Government.

Trade Principal Secretary Chris Kiptoo said yesterday aggrieved investors had taken the Government to the London-based International Centre for Settlement of Investment Disputes (ICSID), seeking redress over the controversial deals.

The PS, who spoke during the opening of the 11th annual forum of developing countries investment negotiators in Nairobi, said the disputes arose from 'vague language in investment treaties'.

“The forum comes at a time when foreign investors are filing an increasing number of costly disputes against governments, often for policy decisions relating to environmental protection, public health, taxation, or stakeholder engagement aimed at preventing conflict associated with displacements caused by large land purchases and mining projects,” he said. “Kenya has not been spared. There are ongoing cases at ICSID with claims amounting to Sh334 billion.”

The forum has attracted more than 130 government representatives from more than 70 countries.

One of the defective agreements is a case in which shadowy companies claimed to have supplied the Government with a sophisticated passport equipment system from France and a forensic science laboratory for the police in what came to be known as the Anglo Leasing scandal.

The country had to pay Sh1.4 billion after the firms successfully filed for payment in the international court.

With Kenya preparing to float a Eurobond in 2014, President Uhuru Kenyatta instructed National Treasury Cabinet Secretary Henry Rotich to settle the debt to allow the bond to be issued. Mr Kiptoo said the Government was developing a model investment treaty and an investment agreement policy with clear rules and responsibilities to avoid repeating past mistakes.

“We have seen how vague language in investment treaties can result in massive payouts,” he said.