Kimunya cleared over Grand Regency sale

The Grand Regency Hotel was under-valued before it was sold to a Libyan firm, sources privy to Cockar Commission report said on Monday.

The sources said that according to the report, the fate of former Finance Minister Amos Kimunya will remain unclear after the commission found that he did not do anything wrong.

However, the commission, the sources said, concluded that Mr Kimunya’s office (the Treasury) should have advised the Central Bank on how to sell the property.

According to the sources, CBK governor Njuguna Ndung’u was found to have flouted procurement procedures and had sold the hotel irregularly.

Those familiar with the report indicated that these were the key recommendations made by the commission chaired by former Chief Justice Abdul Majid Cockar. The report was handed to President Kibaki on Monday.

A statement from the Presidential Press Service said: “The Government will study the report and take the necessary action.”

President Kibaki and Prime Minister Raila Odinga had said they would wait for the commission’s report before reshuffling the Cabinet.

However, Parliamentary Accounts Committee chairman Bonny Khalwale on Monday said it would be wrong for the President to re-appoint Mr Kimunya to the Cabinet even if the Cockar commission had cleared the former Finance minister over the sale of the hotel.

Dr Khalwale said his motion of no confidence against Mr Kimunya was founded on among others the Grand Regency Hotel sale, procurement of currency notes, the Safaricom IPO and privatisation of Telkom Kenya.

According to him, the report of the Cockar commission was inferior to that compiled by the Finance Committee on Parliament which ruled that Mr Kimunya should not be returned to the Cabinet.

“The commission cannot pretend to be superior to Parliament. It will be dictatorship by the executive to overlook what Parliament did,” Dr Khalwale said.

The sale of the Grand Regency Hotel to Libyan African Arab Investment Company Kenya sparked a controversy that led Mr Kimunya to step aside as Finance minister after Parliament passed a vote of no confidence against him.

The sale of the hotel for Sh2.9 billion raised a storm with Mr Kimunya being blamed for what Lands minister James Orengo described as a “secret deal”.

However, no conclusive evidence was tabled before the Cockar commission to implicate Mr Kimunya over the sale. The motion of no confidence was tabled by Dr Khalwale.

During the public hearings, the Cockar Commission was told that CBK had appointed an independent valuer before selling the hotel to the Libyan company.

Lloyd Masika had valued the hotel in February as a going concern at Sh1.7 billion. This was Sh1.2 billion less than the Sh2.9 billion Laico paid to the bank.

The firm had given the commission a breakdown of the valuation as Sh500 million for the two-acre piece of land, Sh580 million for the building and Sh344 million for machinery and equipment.

The chief government valuer, Mr Anthony Mateng’e, had told the commission that he valued the hotel at Sh2 billion — Sh700 million for the land and Sh1.3 billion for the building.

The Cockar commission was mandated to question all those involved in the transaction. The team was also mandated to question Kenya Anti-Corruption Commission director Aaron Ringera, Attorney-General Amos Wako, businessman Kamlesh Pattni and other shareholders of Uhuru Highway Development Limited, the company that owned the hotel.

The commission was to gather information from wananchi who knew about the sale, and opinions from experts on how such transactions were to be carried out, including using other reports and documents that would shed light on the case.

The three-member commission had retired judge Cockar as chairman, Mr Kathurima M’inoti, chairman of the Law Reform Commission and Mr Charles Kirui, a chartered accountant.

State counsel Anthony Obwayo was the secretary to the commission and Lawyer Wilfred Mati was named counsel to the inquiry team. Later, President Kibaki appointed Francis Etole to assist Mr Mati.

Sources who have read the report say the Cockar team concluded that Mr Kimunya had not committed any crimes of commission or omission over the sale and that the hotel transfer was done by CBK and that Mr Kimunya did not play a key role in the transaction.

Adversely mentioned

Mr Kimunya was not adversely mentioned by witnesses at the Cockar commission. Even Lands minister James Orengo, who first broke news of the sale, did not adversely mention Mr Kimunya.

A parliamentary committee on Finance, headed by Nambale MP Chris Okemo, which also looked into the sale ruled that Mr Kimunya was unfit to be a minister and that President Kibaki should not reappoint him to the Cabinet.

Mr Okemo’s team accused Mr Kimunya of misleading the House that the hotel had not been sold. However, the Cockar team was told that the then minister had not misled the House.