MPs put Treasury on the spot over Sh24bn KQ deal
Treasury Cabinet Secretary Ukur Yatani.
A Treasury deal to convert a Sh24 billion government loan to Kenya Airways into equity without parliamentary approval is the latest in a series of secret dealings leading to the nationalisation of the airline.
A House team yesterday raised a storm over the plan by the National Treasury to bypass the House to write off the loan that Kenya Airways (KQ) owes the government.
The secret dealing saw the Public Accounts Committee (PAC) of the National Assembly summon National Treasury Cabinet Secretary Ukur Yatani, Principal Secretary Julius Muia and head of Civil Service Joseph Kinyua for questioning.
The loan amount excludes Sh2.9 billion in accrued interest, says Auditor-General Nancy Gathungu’s report on the accounts of the Treasury for the financial year 2018/19, currently before Parliament.
Accrued interest
MPs said the House was not involved in the loan conversion, contrary to the law.
The other questionable matter is that the Treasury omitted the KQ loan amount and the accrued interest from its books of accounts for the year 2019/20 that were sent to the Auditor-General.
Yesterday, KQ chief executive Allan Kilavuka was at pains to explain to MPs the irregularity even as he said the deal to convert the loan into equity was sanctioned by the Cabinet.
He also cited a letter from former Treasury PS Kamau Thugge conveying the Cabinet decision.
“The PS (Kamau Thugge) was giving us an okay to convert the KQ loan into equity,” Mr Kilavuka said.
However, members of PAC that is chaired by Ugunja MP Opiyo Wandayi wondered how a Cabinet decision involving amounts of such magnitude would be done without involving the National Assembly that appropriates public spending.
“Whether the approval of Parliament was sought or not is not for me to answer but the National Treasury,” Mr Kilavuka said.
Attempts by Mr Kilavuka to rely on a letter by the Clerk of the National Assembly as purportedly communicating the House approval of the conversion of the KQ loan into equity was questioned by the committee.
“The Clerk is clear in his communication to the National Treasury. Parliament only approved Sh75 billion for KQ. There is nowhere it is indicated that the letter by the Clerk covers the conversion of KQ loans into equity,” Mr Wandayi said.
Cabinet minutes
Documents Mr Kilavuka presented to PAC, specifically a letter by Dr Thugge to former KQ boss Sebastian Mikosz, shows the House only approved the additional KQ loan.
The documents further indicate that the approval for the conversion of the loan by the Cabinet was made in June 2017.
Gatanga MP Joseph Ngugi demanded that the KQ boss provide the Cabinet minutes approving the loan conversion.
“Do you have the minutes of the Cabinet and the shareholders approving the conversion of the loan?” Mr Ngugi demanded.
This was followed by the extraordinary shareholders general meeting on August 7, 2017 to approve restructuring of the debt and equity in KQ.
