CBK chief at pains to explain hotel deal

September 23, 2008 12:00 am

, NAIROBI, September 23 – Central Bank of Kenya (CBK) Governor Njuguna Ndung’u was on Tuesday put on the spot over whether he considered other offers apart from the Libyan deal during the controversial sale of the Grand Regency hotel.

Professor Ndung’u, who was giving evidence for the second day before the commission investigating the transaction however said the deal was signed in secrecy for fear of possible litigation.

Although he remained non-committal over whether they would have accepted another offer, Professor Ndung’u said they would not have rejected it.

Following are experts of the proceedings:

Cockar: If some other investor had come or had presented a higher offer from another bidder would you have accepted it?

Ndung’u: We didn’t get such an offer but we would have considered it according to the way it was brought in.

Cockar: Would you have rejected it?

Ndung’u: I’m saying we would have considered it but not rejected it.

The governor defended the sale saying it marked the first recovery of some of the monies lost during the Goldenberg scandal. 
He said the bank wanted to realise the maximum value of the hotel, whose sale had been a discomfort for 15 years.

The governor stated: “Central Bank is not asking for a compliment.  From the history of the Goldenberg scam I have come to the conclusion that this is the first recovery of the monies lost in the scam.”

The Commission further heard that the Central Bank of Kenya was dealing with a Libyan company as the government appointed purchaser.

This came after Professor Ndung’u was asked to explain the process the bank used to settled on the Libyan African Investment Company (LAICO) as the purchaser.

He explained that the both the he and the Libyan Ambassador used the Memorandum of Understanding as the guiding factor to the deal.

“As at September 13 last year, we already had the MoU which contained the contents of the wish expressed by the Libyan government,” he stated.

It also emerged that the governor may have set the price for the sale of the hotel.

Professor Ndung’u who is appearing as the commission’s 20th witness said the bank had rejected an offer of $33 million from the Libyans as it was below their quoted price of $53 million but later settled for $45 million dollars.

Lawyer Harrison Kinyanjui representing Westmont Holdings, which had initially wanted to purchase the hotel in 1997, wanted the governor to explain how they arrived at the quoted price but Professor Ndung’u explained that as the head of the country’s monetary facility he ensured that Kenyan got the best deal.

He cited three guiding factors that were used to determine the price.  “Look at the valuation and the dollar value.  The charge of Sh2.5 billion (owed by Kamlesh Pattni) and considering all that, then Central Bank needed to maximize the value given the conditions existing then,” he said.


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