Details of Hazina Estate saga slowly emerge

April 27, 2012


Lugari MP Cyrus Jirongo says the project was arm-twisted from him/FILE
NAIROBI, Kenya, Apr 27 – The National Social Security Fund (NSSF) has revealed that the contested Nairobi South B estate from a 1992 housing project with contractor Sololo Outlets was never the Fund’s project to begin with.

In the latest twist to the 20-year saga between NSSF and Sololo Outlets, the Fund’s acting Managing Trustee Tom Odongo told Parliament’s Public Investment Committee (PIC) that the Hazina Estate project in South B belonged to Sololo Outlets, which ran into financial constraints and decided to sell the project to NSSF.

“The project of Hazina was never ours. This project belonged to Sololo and they approached NSSF to buy the project. It did not come directly from Sololo to NSSF. It was a directive that we received from the then Permanent Secretary Ministry of Finance,” he said.

Odongo read several letters allegedly authored by then Treasury Permanent Secretary Wilfred Koinange in league with the Office of then Vice President George Saitoti to the NSSF, requesting that it deposit Sh300 million in Post Bank Credit Limited for the Hazina Estate project that was a 25 percent instalment of the entire project.

An alleged letter from Sololo Outlets requesting to increase the cost of the project from Sh1.2 billion, in the original contract with NSSF, to Sh2.65 billion, the NSSF claims, is what caused the cancellation of the Hazina Estate development.

Odongo refused to acknowledge allegations that the project was cancelled because Lugari MP Cyrus Jirongo and Sololo Outlets fell out with the political stronghold in power at the time, however he clarified that the Fund’s investment in Hazina Estate was politically motivated.

“In 1992 all of us know the pressures from government then. Sololo ran out of funds and opted to sell this project to NSSF and he [Jirongo] did this through the powers that be during that time. We’ve gone to court and according to us it’s for the best interest for the Fund and the members,” he said.

After the cancellation, NSSF hired another contractor to finish the works prompting Sololo Outlets to sue the Fund, and since then been awarded Sh490 million as settlement for breach of contract reviewed downward from the original claim of Sh4.5 billion.

Juja MP William Kabogo questioned how the NSSF arrived at the Sh490 million settlement amount to Sololo Outlets after the Fund made an initial proposal for Sh790 million.

Odongo explained that NSSF along with the Ministry of Public Works reviewed the Fund’s proposals against the figures given by Sololo for damages and determined that some were inflated.

“We had to go in depth in order to arrive at what would be reasonable payment to Sololo. We arrived at a figure of Sh245 million. If you take Sh245 million and work out interest at a court rate of 12 percent since 23 May 1993 it was bringing an interest figure of Sh544.8 which added to Sh245 million would have come to Sh790 million,” he said.

Odongo added that a negotiation took place with the NSSF board that decided to base the settlement figure on the Duplum Rule that the interest payable should not exceed the principal amount and decided to peg the interest rate at Sh245 million, which when added to the Sh245 million payable amount, equalled a settlement total of Sh490 million.

“The figure of Sh790 million was a management proposal to the Board and not to Jirongo,” Odongo clarified.

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