Sh1.2 billion LSK project may stall as lawyers object

The planned construction of Sh1.2 billion Arbitration Centre has been opposed by a section of Law Society of Kenya (LSK) members who are protesting the compulsory contribution of Sh39,000 by each member. A section of the 6500 LSK members accused their chairman Eric Mutua of imposing the charges without concurrence from all advocates.

The group objecting the charges imposed on each member argued that Mr Mutua did not consult them during the LSK Special General Meeting held on September 27 before coming up with the decision to raise a total of Sh250 million from the advocates towards construction of the centre.

“The LSK has not provided us with information to show that it is able to meet obligation of the project in addition to the projected income from the project after completion,” Alex Gatundu, an advocate and a member of the LSK said at a press conference in Nairobi.

LSK plans to construct a four storey International Arbitration centre in Nairobi with members contributing part of the funds. The society plans to collect about Sh250 million from about 6500 active members with each contributing Sh39,000. It will then borrow Sh1 billion to finance the project with a repayment period of 25 years at an interest of 16 per cent.

The lawyers opposed to the project threatened that they will be writing to Kenya Commercial bank and the Housing Finance Corporation of Kenya to stop any loan advance to LSK until Mr Mutua and the LSK council reach an agreement with all affected members.

“The LSK council has maintained a studious silence on the issue, hoping it will just disappear, because there are no clear answers to the issues the membership is raising and it would seem no proper cost –benefit analysis has been done,” Mr Gatundu said.

Accompanied by about 30 lawyers, Mr Gatundu expressed fears that the society may fail to service the Sh1 billion loan thereby exposing advocates who are the loan guarantors to be held responsible. They challenged Mr Mutua to clarify whether the Sh39 000 contributions will be refunded with some benefits such as dividends and interest or whether it is just charitable in nature.

The group also accused the LSK Council of intimidation by refusing to engage young advocates who are interested in participating in the project and prefer the formation of a Special Purpose Vehicle (a new company) to spearhead the project.

They demanded to be told how Sh27 million that has been spent on consultancy on the project was spent before ground breaking of the project.

“As trustees, the LSK council is accountable to the membership, and should not dismiss our enquiries as mere ‘noise making’, as is currently happening,” said Aluso Ingati, an LSK member.

The lawyers, who included Faith Waigwa, demanded full disclosure of the project saying members wanted to know the Bill of Quantities and the tender documents for the project to assure members that the project is above board.

“We can’t be asking the government and its institutions to account yet LSK cannot listen and address genuine concerns of its members,” said Ms Waigwa.

Ms Ingati argued that the establishment of a Special Purpose Vehicle, comprising of respected persons from LSK advocates as directors will engage the engineers, lawyers, architects among other relevant professionals to carry out the function currently being undertaken by LSK council.

LSK council is hoping that the proposed International Arbitration Centre will help reduce case backlog in the judicial system.