Economy

Lawyers claim fraud in Sh1.2bn LSK arbitration centre

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LSK chairman Eric Mutua had in the special general meeting announced that each of the 6,500 LSK members would contribute Sh39,000 so as to raise Sh250 million towards completion of the project. PHOTO | FILE

More than 1,000 lawyers have filed a petition at the Mombasa High Court opposing the construction of a Sh1.2 billion arbitration centre by the Law Society of Kenya, arguing that the resolution was passed fraudulently.

The lawyers have in their suit claimed that the special general meeting held by the Law Society of Kenya (LSK) on September 27 in Nairobi was convened illegally, and that all resolutions, including that to construct the arbitration centre, should be declared null and void.

They further claim that the notice sent out to LSK members failed to indicate that there would be a vote, and the question members would be voting for or against, which is contrary to the law.

“The petitioners contend that the notice was defective and void, and as such the resolutions passed were also void,” said McMillan Jengo, one of the petitioners.

The 1,018 lawyers claim that the LSK wants to force them into contributing to the Sh1.2 billion facility without full disclosure and accountability on the project.

“LSK’s council has refused to give information to the petitioners about the subject matter project and to date no information whatsoever has been circulated and LSK’s council, who sit as trustees of the applicants in LSK, have actually pleaded confidentiality.”

Among the documents the lawyers claim they have been denied are minutes for the meetings in which the LSK council discussed the project and those of the special general meeting, and various documents showing the amount of money paid to consultants in the project.

“The so called special general meeting was a sham merely meant to sanitise an unlawful process and a pre-determined position of the council.

The events prior to its calling and during its session did not create an atmosphere that would facilitate any meaningful debate,” they added.

LSK chair Eric Mutua had in the special general meeting announced that each of the 6,500 LSK members would contribute Sh39,000 so as to raise Sh250 million towards completion of the project.

The balance was to be taken out of a Sh1 billion loan to be repaid over a 25-year period.

The announcement followed a vote by advocates in the meeting in favour of the project.

The project was expected to be completed within two years of commencement, and was to have 48 five-star rooms, a hall to accommodate 660 people and a business centre, among other features.

The petitioners have also alleged in their suit papers that the proposed LSK centre is in conflict with the purpose of the Nairobi International Arbitration Centre.

LSK had planned to construct the four-storey building in Nairobi’s South C area, which was to be kick-started with Sh100 million it has in its bank accounts.