Treasury to seek House clearance ahead of deadline

The National Treasury is counting on clearance from Parliament before making payments amounting to Sh1.4 billion to contractors in the Anglo-Leasing security contracts.

The National Assembly will make the final decision on the request made by the National Treasury to pay the contractor in London US$16 million.

The Treasury finds itself in a tight spot as it is required to pay the money by or on April 28 which is next Monday.

The amount is a negotiated sum from US$18 million (Sh1.5 billion) which had initially been awarded to the contractor. The government lost the suit in London and Swiss courts.

Sources reveal that the Treasury finds itself in a tight spot because the Controller of Budget has declined to sign and grant the payments unless Parliament gives approval for the same.

AG’S POSITION

On Tuesday, Treasury Cabinet Secretary Henry Rotich, Attorney General Githu Muigai and Principal Secretary in the Treasury Kamau Thugge met with the joint committees of the National Assembly-Budget and Appropriations and the Finance, Planning and Trade committees to lobby for clearance of the payments to beat the deadline by the court.

The AG told the meeting that his office had exhausted all appeal processes in the case.

The Treasury had earlier attempted to seek clearance from the Budget and Appropriations committee but was given two conditions which it has since met. The MPs asked The Treasury to first seek clearance from the Cabinet and secondly to get a written legal opinion on the same from the Attorney General.

The Treasury team, which included its legal officers, was back on Wednesday having met the conditions. Members of the two committees, although agreeing in principal to approve the request, resolved to put the Treasury’s request before the plenary sitting of the House to have the House make the final decision.

The argument advanced by the AG and the Treasury team was that Kenya’s assets abroad could easily be attached should the government fail to pay the amount.

The government is also about to float a sovereign bond and the fear is that this could paint the country in a negative light given the case.

MPs will, therefore, be expected to first approve the amount awarded to the company as debt because it does not appear in the government’s financial statements as such. It is only after that Parliament can appropriate the same and grant clearance.

The Treasury will now pay a total US$16.4 million (Sh1.4 billion) to First Mercantile and Universal Satspace after top government officials gave their nod to the payment. The Attorney-General, the Cabinet Secretaries for Treasury, Defence and Foreign Affairs all agreed that the only way out was to pay the company.

The government, in a bid to escape making the payment had even sought legal advice from a UK law firm on how to skip the payment but according to the AG’s office, it was still advised to clear the money.

The Treasury indicates that the AG gave the go-ahead to make the payments. The Treasury is, however, cautious on the matter given its sensitivity and has refrained from making any payments before getting the approval from Parliament.

“The settlement agreement letters have been signed by the government of Kenya and the claimants and the Treasury the documentation for payment,” it stated partly.

First Mercantile was to provide financing for the purchase of satellite telecommunications equipment for the Postal Corporation of Kenya from Spacenet, an American firm whereas Universal Satspace was controversially contracted by the Ministry of Transport to provide 10 years of bandwidth worth Sh2 billion.

On December 20, last year, the government lost its suit against Universal Satspace Company in London and was ordered to pay the amount.

The Jubilee Government will now pay the billions to the shadowy company at a time it is trying to cut down its expenses.