Queries linger over Sh5b City Hall loan

August 29, 2012
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The officials from the council led by the Town Clerk Roba Duba could only produce the bank loan offer letter and were unable to explain/FILE

, NAIROBI, Kenya, Aug 29 – The mystery surrounding the City Council of Nairobi’s Sh5 billion loan from Equity Bank deepened on Tuesday, when officials from the council were unable to produce the final loan agreement document before the Parliamentary Committee on Local Authorities.

The officials from the council led by the Town Clerk Roba Duba could only produce the bank loan offer letter and were unable to explain how the bank was able to release the money without the any loan agreement letter.

The council’s Director of Legal Affairs Aduma Owuor who seemed hesitant to answer questions from the committee members however admitted that he was not involved in the whole process. He said that the then Town Clerk Philip Kisia did not consult him and claimed that he involved selected officials.

“Mr chairman, I was not consulted on it. I know the process was commenced but I did not see the final document and in this case, my own investigation reveals that the matter was handled by my deputies,” said Owuor.

He said that Kisia and Nairobi Mayor George Aladwa consulted his juniors in the whole process.

The council’s Treasurer Jimmy Kiamba also distanced himself from the deal and instead claimed that his deputy Margaret Osili was the one who handled the matter.

He also revealed that the Sh5 billion was put in a new account at a new bank and not that of the council.

Kilome MP Harun Mwau who is a member of the committee, wanted to know how the bank released the money and why the council has already started paying the loan without any loan agreement document in place.

He feels that Kisia and Aladwa have a case to answer alleging that the loan may have been acquired in a dubious way.

“I am sure all of you have at one time borrowed money from the bank. When you go to the bank and you give them application for a loan, they give you an offer which you can accept or you go and negotiate. So what we have here is a letter of offer and not a loan agreement; it has still many dashes, ” Mwau said.

Following the discrepancies, the committee’s chairman Benjamin Lagat has summoned the former Town Clerk Philip Kisia, the council’s Deputy Treasurer, Deputy Legal Affairs Director and Equity Bank’s CEO James Mwangi to appear before the committee next week to shed some light on the matter.

“It is not possible that a whole City Council of Nairobi cannot give such an important document. You ask the clerk he says, I don’t know… you ask the treasurer he says I don’t know, you ask the legal officer, he has no clue, I think this is a joke,” Lagat said.

It also emerged that Equity Bank eventually raised the interest rate without consulting the council from the initial 10 percent to 24 percent.

The Local Government PS Karega Mutahi who had accompanied the officials was unable to defend the council, after he later told the committee that he was not aware that the contract document could not be traced.

“Mr chairman, I am surprised… this is wrong, I don’t know about this,” Mutahi defended himself. “Yes the ministry authorized the loan, but you know we are not involved in micro managing institutions under the ministries.”

He added that the ministry will wait for the report from the committee adding that they may have to suspend some officials in the council if they will be found guilty of corruption.

The Kenya National Audit Office has now been tasked to give the exact amount that Kenyans may lose if the deal is found to have been a flawed.

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