Tag Archives: Grand Regency Hotel

If Nelly Furtado and Beyonce are Embarrassed, is the Government of Kenya?

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“Revolt Cuts Short Gaddafi’s Economic March Into Kenya”, Business Daily:

It is not clear what will be the fate of the agreement that Kenya signed with the Libyan Government.

The most significant for the business community was the trade agreement in which Libya and Kenya agreed to grant each other most favoured nation treatment in all matters relating to customs duties.

The foray into Libya came shortly after the Narc party victory when Mr Kibaki’s nephew, the late Alex Mureithi, visited Tripoli in mid 2003 as a special envoy.

While details of this visit and its implications on future Kenya-Libya relations are hazy, it telling that Mureithi, who was to become the Managing Director of Tana and Athi Development Authority, was a confidant of Mr Kibaki —who said as much at his funeral in Nyahururu.

The Libyans, or rather the Gaddafi network, had lofty dreams on Kenya since it was the largest economy in the eastern Africa region.

Initially, the Libyan African Arab Investment Company had shown interest in setting up a 5-6 Star hotel in Nairobi, but the Grand Regency sale came at the appropriate time, sparking a national row on how the Libyans bought the hotel.

The Governor of the Central Bank, Prof Njuguna Ndung’u, was to tell a commission that was investigating the sale that the government offered the hotel to the Libyans without tendering.

Grand Regency was a public property and its sale should not have been shrouded in any secrecy whatever value it was given. But it was.

A conference centre in Mombasa that was also in the pipeline never materialised as the Libyans were caught in the Grand Regency pricing row that saw then Finance Minister Amos Kimunya step aside.

It was the cultural cooperation that was pushed by Gaddafi that has seen some “elders” led by Kamlesh Pattni visit Libya.

Before the revolts across the Arab countries, Kenya and Libya’s diplomatic manoeuvring was in full swing, with Kibaki sending vice-president Kalonzo Musyoka to go and lobby Tripoli to support Kenya’s efforts at the African Union (AU) to defer the post-election trials at the International Criminal Court (ICC).

Of course it was widely rumored that the concessional sale of the Grand Regency Hotel by the Government of Kenya was part of the financing for the Kibaki re-election campaign. I have nothing independent to contribute on whether or not this is true, but would simply note the lack of other explanations of various facets of the transaction and lack of thorough investigation and or prosecution of anyone involved.

For an overview of perceptions of Gaddafi in other African capitals, see “Qaddafi’s Tangled Legacy in Africa” at the CSIS Online Africa Policy Forum blog.

 

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Raila Bumps Ruto to Higher Education, Science and Technology; Kibaki gets to add Transportation Ministry to Kimunya

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“Ruto moved as Raila cracks whip in ODM” headlines the Daily Nation

You might think that Higher Education, Science and Technology would be pretty important for Kenya’s future–and you would be right. But, the Nation is good enough to explain that Agriculture is the plum post because it controls 30 parastatals, whereas Higher Ed, Science and Technology only controls three.

OK, so now we investigate the Maize Scandal, anyone, please . . .

Of course, Hon. Kimunya now gets to bring his standards to Transportation, since no accountability has yet to attach to the Grand Regency Hotel sale scandal. Kibaki cronies have key interests in common carriers in Nairobi.

In a related story, “Raila shaping his political forces for 2012 election”, the Nation asserts:

The power struggle started with Cabinet and other government appointments, was amplified by the fierce opposition to the PM’s drive to clear the Mau forest of illegal encroachment and has seemingly come to a head with the two taking divergent positions on the new constitution.

But for Mr Odinga, taking Mr Ruto down a peg because of the issues they have differed on might be secondary to the longer-term goal of shaping his political forces ahead of 2012 elections.

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Impunity Wins Again under GNU?: Business Daily reports “Pattni Gets Last Laugh in Grand Regency Saga”

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The Big Story in Nairobi’s Business Daily reports the “closing yet another window for recovering billions of public money lost through the fraudulent gold export scheme” Goldenburg.

The newspaper has reviewed the reporting of the Central Bank of Kenya and discovered that it has written off Sh1.5B that remained due from a loan secured solely by the former Grand Regency Hotel.

The Business Daily reveals that the Cockar Report–delivered to President Kibaki but yet to be made public–concludes that the sale process was “flawed”, “secret” and “hasty”. The price received appears to reflect a gross undervaluation in that it could have been realized 13 years earlier–who thinks this hotel in downtown Nairobi was worth the same in the early 90s as in the late 00s?. Further, it appears that the Cockar Reports identifies a bidder who would have paid significantly more than the Libyan firm Laico–in fact an amount that would have paid the debt to the CBK in full!

The context: “Another commission, headed by Justice Samuel Bosire, concluded in a 2006 report that Kenya’s economy could have lost a total of Sh158 billion in the Goldenberg Scandal through a web of transactions that involved 487 companies and individuals.”; “Mr Kamlesh Pattni, who was named as a key player in the scam is understood to have surrendered Grand Regency to CBK in a ploy for amnesty from prosecution in the Goldenberg cases.”

Kudos to Business Daily Africa for diligence and solid reporting. Let’s hope they follow-up (in spite of the pressure I am sure they will receive not to).

Since I was working in Nairobi while this was ongoing, I can say that it was an open and obvious scam just from the basic issues that are apparently identified in the Cockar Report: secrecy, haste and an inexplicably low price.

The next question: Why? (in other words, who benefited?). Was this just a charitable impulse to transfer wealth from the Kenyan public to a group of private Libyan investors? Hard to imagine! What reason would the CBK have for selling to Laico for an amount that left a deficiency on the Pattni loan of Sh1.5B if another bidder was willing to pay the full amount and the hotel was probably worth even more? This would benefit neither the creditor nor the debtor. Did the buyers really pay more, in cash or other interests–just to someone else? Why the “haste” after so many years? Certainly the rumors at the time where that the dealmaking was wrapped up in the non-transparent financing of election expenses.

And why do we not have answers now?

As far as Pattni himself goes, it was interesting to see Pattni seem to spend quite a lot of money on his own Parliamentary campaign in Nairobi while getting few votes–and also see his “party” active elsewhere.

A basic rule of financial fraud that I have observed over many years is that if you want to steal and maximize your chances of keeping a whole lot of it if you get caught is that you should steal so much that you have plenty to spread around to “buy peace” afterwards. Sort of “the audacity of greed”.