Court blocks probe into Anglo Leasing contract

July 11, 2008 12:00 am

, NAIROBI, July 11 – The High Court has barred the Ministry of Finance from hiring an audit firm to investigate circumstances surrounding one of the 18 Anglo-leasing type tenders.

Justice Joseph Nyamu said Thursday that a Sh500 million contract in which English firms – Midland Finance and Securities and Globetel Inc – were allowed to supply the government with telecommunication equipment for the Administration Police in May 2003, was legitimate.

The transaction is said to have been one of 18 security-related "Anglo Leasing type" contracts, which had been regarded as corrupt, and the first of its type signed by the Kibaki administration in 2003.

The companies had moved to court to challenge a decision by the Finance Ministry to hire an audit firm, Pricewaterhouse Coopers (PWC), to conduct forensic investigations in January 2007 to determine whether the contract was ‘corruptly awarded’.

Midland Finance and Securities alongside Globetel Inc. firmly contested the decision, saying the Attorney General (AG) gave an opinion sanctioning the contract as lawful. 

According to the suit papers, PWC was contracted to perform forensic investigations to determine whether there had been pricing, financing and other irregularities in the procurement of the contract.

PWC was also expected to determine the market value of goods, works and services rendered or yet to be delivered, besides establishing whether a criminal activity had taken place in relation to the multi-million shilling contract.

The companies claimed that the Kenya Anti Corruption Commission had no right to cede its mandate to investigate corruption and economic crimes to the Ministry of Finance.

In a 78-page judgment, Justice Nyamu said the government ought not to invoke the law in a different light to otherwise justify the contract against the spirit of the Attorney General.

"I find that the government cannot invoke the force majeure (greater force) clause to justify the PWC contract, because the PWC contract prima facie goes both against the letter and the spirit of the Attorney General’s opinion," Justice Nyamu ruled.

Midland Finance and Securities and Globetel Inc. were contracted by the government to supply and finance contracts for an Administration Police Telecommunications Network.

The Judge, however, noted that the fact that he ruled in the favour of the foreign company was not indicative of the court supporting a tainted contract.

He said: "By upholding party autonomy, the court should not be viewed as supporting a tainted contract, because this is a matter of proof at the proper forum of the resolution of the dispute."

The companies have maintained that they are entitled to an outstanding payment of over Sh400 million, a remainder of the full contractual amount, following an initial down payment of over Sh150 million.

The government on the other hand has insisted that the investigations done by PWC were meant to assist the Attorney General on whether or not to lay any indictments against the two companies.

"It is not proper for the government through the Attorney General to now back out of a written opinion concerning compliance given by that high office," stated Justice Nyamu.

"This court cannot allow the Attorney General to violate the Principle of public morality, which gives authority and weight to his opinion in the eyes of the other contracting party," he added.

These developments came even as attempts to solve the mystery of the Anglo Leasing scandal, which has since been described as an economic ogre, remained elusive.


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