Westmount blocked from tabling Regency ruling

August 12, 2008
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, NAIROBI, August 12 – The Commission of Inquiry probing the ‘shady’ sale of Grand Regency Hotel on Tuesday  refused to admit as evidence a 1999 ruling by the High Court relating to the hotel’s ownership.

Commission Chair Justice (rtd) Majid Cockar turned down submissions by Westmount Holdings’ lawyer Harrison Kinyanjui, which referred to a ruling that had restrained the sale of the hotel.

Westmount, which is a subsidiary of Malaysian-based Lynwood Development Holding, claims it bought the hotel from businessman Kamlesh Pattni in the nineties.

Cockar ruled; “It is true that there is no evidence on record relating to the alleged “consent judgement” nor is any such “consent judgement or order” registered against the title.”

He pointed out that the witness had no access to such information.

The chairman also explained that the wide mandate given to his team did not entitle it nor justify it to allow inadmissible information to be put before it.

Cockar ruled that Westmount had not followed proper procedure in introducing the evidence before the commission.

“If there is consent judgement which Mr Kinyanjui has attempted to bring to the notice of the commission, then the proper course for him to follow is to wait until the parties or advocates involved in the consent judgement are called to give evidence,” read the ruling.

The Commission has also been told that the Central Bank of Kenya may have changed the reason for a valuation it ordered on the hotel in January, from Lloyd Masika.

Through its lawyer, CBK asked that the valuation be carried out on ‘going away’ purposes, and not accounting purposes as had been earlier given as the reason for valuation.

Director David Masika was put to task over whether the value of the hotel would have gone up due to the new reason.

Masika: We didn’t value the hotel ‘on a going concern’ we valued it on a ‘depreciated replacement cost’.

Commissioner: Assuming you had carried out those instructions would you have to come back with a different figure?

Masika: Had it been ‘on a going concern’ one would have considered the goodwill, which then would be added to my valuation.

Earlier Masika told the commission that their valuation put the hotel’s worth at Sh1.7 billion on the open market, Sh1.27 billion in mortgage value and Sh1.16 billion through forced sale.

“A major problem in the Grand Regency Hotel was the condition the property already was in and I believe is in even right now, which requires huge investments to bring it back in line with the market,” Masika said.

“In the last one year, Lloyd Masika has valued basically most of the big hotels, but Grand Regency has been an exception in that it has equipment that is almost 20 years old.”

Masika said it would be impossible to conduct a complete valuation of the hotel in less than three weeks, a statement contradictory to the Chief Government Valuer’s testimony, where he said they completed a valuation in a fortnight.

Meanwhile, the commission was told that there could have been some irregularities during the application process of the transfer of the lands documents.

While concluding her testimony, Assistant Registrar of Lands Rosina Mule was asked why a temporary file had to be opened to handle the transfer.

Mule answered that a temporary cover was normal if an original file was misplaced.
 
Another irregularity arose after Mule insisted that a date entry error on the application form meant to be used to request for transfer of documents was done by the attorneys handling the issue. The matter drew heated objection from the Adan, Wetungula and Partners lawyer Steven Mwenesi, who said that Lands Ministry officials had insisted on filing the documents.

This prompted Justice (rtd) Cockar to step in: “Ms Mule, you should not say it was the attorneys because you were not there, were you? Just say that is the normal practice so that we can move on.”

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