, NAIROBI, Kenya, May 15 – President Uhuru Kenyatta has authorised the immediate payment of the controversial Anglo Leasing debts, saying further delays were putting the country’s economy at risk.
A statement from State House Spokesman Manoah Esipisu late on Thursday said Kenya had exhausted all judicial options to forestall payment of the debts following judgments issued by courts in Geneva and London.
“The President has had to make a painful decision on what is the greater evil: either (pay) the money or put the country’s economy at risk. By making this payment, the President is not legitimising what he and many Kenyans believe to have been a series of fraudulent transactions,” reads the statement.
State House said The Treasury had been instructed to pay Sh1.43 billion (US$16.4 million), which is the outstanding figure following numerous negotiations with the claimants who initially claimed Sh1.64 billion (US$18.8 million).
“The Government’s decision to settle the judgment debts is premised on (i) protecting Kenya’s economy on account of rising interest rates occasioned by domestic borrowing due to constrained access to international borrowing, (ii) protecting Kenya’s reputation as a country that meets its contractual obligations and adheres to the rule of law,(iii) protecting Kenya’s assets abroad, and (iv) maintaining and improving Kenya’s credit rating currently at B+.”
The president said failure to clear the debts was putting Kenya at risk of higher debts as the annual costs of non-settlement would be Sh21 billion, being the cost of higher interest rates on domestic borrowing both for the public and private sectors.
“Therefore, given that the cost of paying the judgment debts is Sh1.4 billion, this means that the benefits of settling them outweigh the costs of non-payment by 15 times. In addition, by paying the Sh1.4 billion, the Government unlocks the Sh 130 billion from the sovereign bond,” he argued.
He has, however, ordered a fresh probe into the scam saying the relevant institutions should ensure the culprits are brought to book.
“Kenya now has a fully constituted Ethics and Anti-Corruption Commission which can and should take this process forward. There are also other agencies, including parliament that could play a role.”
“It is now up to these responsible agencies to ensure that Kenyans get restitution. Our institutions failed Kenya in these cases previously. Kenyans would not welcome further failure in the context of these cases,” said the President’s statement.
The start of the “Anglo Leasing Scandal” was the contracting of a loan in December 2003 by the Department of Immigration which was then under the Office of the Vice President and Ministry of Home Affairs. The purpose of the loan was to enhance security by modernising the issuance of secure passports and purchase of security equipment for use at Kenya’s borders.
The procurement process was however abused and a company going by the name “Anglo Leasing and Finance Company Ltd” was awarded the tender and Sh93 million paid up-front. This became public on 4th May 2004 when the matter was raised in Parliament.
Subsequent review revealed that in the external public debt database, there were a total of 18 contracts similar to the one arranged by the Anglo Leasing and Finance Company Ltd and from then on these loan contracts were labeled “Anglo-Leasing”.
Investigations revealed that the contracting of loans similar to “Anglo Leasing” had been going on in the Government for a long time. In August 2004, the Ministry of Finance suspended payments of all the loans similar to Anglo Leasing and instructed the Controller and Auditor-General to carry out a special audit.
The Public Accounts Committee (PAC) also investigated the matter and on 30th March 2006, its chairman tabled the report on “Special Audit on Procurement of Passport Issuing Equipment”. The report was adopted by Parliament on 4th April 2006.
It covered all the 18 contracts and recommended that all contracts that had not been commenced should be terminated while those which had commenced should be renegotiated with strict adherence to the procurement regulations and procedures. It also recommended investigation and prosecution of all implicated.