Philip Kisia wants the county government to explain why they defaulted on repayment of the Sh5 billion loan that has almost tripled today.
Kisia says his administration sourced the loan from Equity Bank in 2011 to clear statutory debts, money he says was properly allocated. Today, the loan has swelled to over Sh12.3 billion.
“It was logical to borrow the money to clear the debts that were attracting penalties of over 18 per cent. Moreover, we still could not get the Local Authority Transfer Fund (Latf) unless we paid the debts,” Kisia told The Nairobian.
The statutory debts that Kisia sought to clear had allegedly accumulated over a period of 20 years after successive administrations reportedly refused to settle the debt.
Kisia says that by 2011, the statutory debts was over Sh13 billion, owing to huge penalties. He claims to have repaid promptly and even negotiated for waivers, thus saving the city council Sh6 billion.
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In the Sh5 billion loan disbursement, Laptrust was allocated Sh2.3 billion, Lapfund Sh800 million, Kenya Revenue Authority allocated Sh124 million, NSSF got Sh200 million, NHIF was paid Sh105 million, legal creditors got Sh1.3 billion, while other creditors were paid Sh1.29 billion.
Auditors from the Kenya National Audit Office and the Assembly’s Public Accounts Committee have questioned whether the loan was well negotiated. However, but Kisia says seven banks were approached, but only Equity Bank and Co-operative Bank were willing to strike deals.
“They (Equity) agreed to give the loan at 10 per cent, but it was subject to change with the varying dynamics in the sector. They should know the ministry sanctioned it and Central Bank audited the process. We had the option to source the loan or let the council collapse,” says Kisia.
The former town clerk told The Nairobian he took personal initiative to negotiate for waivers and forensic auditing on disputable debts.
“We owed Laptrust Sh8.5 billion, but they waived Sh1.7 billion. We owed Lapfund Sh1.4 billion, but they waived Sh350 million, NHIF Sh2.1 billion, but they waived Sh2 billion, while NSSF claimed Sh1.9 billion. But after reconciliation of books, we found we only owed NSSF Sh200 million,” Kisia claims.
He also claims that when forensic auditing was conducted on other creditors, cases of schemes to swindle the council were unearthed. He says that throughout his tenure that ended in early 2012, the council did not default on the loan repayment. Governor Evans Kidero took over and the county defaulted repayment for whole of 2013, resulting in a Sh0.9 billion penalty.
Equity Bank fell out with the county government in March 2014, and the outstanding debt was bought out by Kenya Commercial Bank in September 2014.
The controversy surrounding the loan repayment has attracted a probe by external auditors, PAC and the County Assembly.
