Parliament orders KAA to explain Sh10bn Pattni deals
Businessman Kamlesh Pattni has re-ignited a long- running legal battle over exclusive rights to operate duty-free shops in Kenya’s airports. PHOTO | FILE
The Kenya Airports Authority (KAA) has until Thursday to table in Parliament documents related to controversial contingent liabilities totalling Sh10.2 billion that arose during the reign of suspended MD Lucy Mbugua.
The Public Investments Committee (PIC) on Monday directed acting KAA managing director Yatich Kangugo to provide a breakdown of a controversial arbitral award of Sh4.3 billion to World Duty Free shops associated with businessman Kamlesh Pattni, another Sh5.5 billion High Court award to World Duty Free and Sh350 million in respect of external legal fees in duty free related matters.
PIC chairman Aden Keynan and committee members questioned the management over claims that KAA had concluded all the cases with Mr Pattni, who is associated with Word Duty Free.
Mr Kangugo, who appeared before the committee to respond to issues that led to the suspension of four senior KAA managers, including Ms Mbugua, sought time to review the documents leading to the announcement that KAA had settled all cases with Pattni.
He said the authority had appealed all the arbitral and court awards to Mr Pattni, adding that no money has been paid arising from the awards.
“We have appealed the cases. I can confirm to you that we have not recorded any consent in court settling the cases,” Mr Kangugo said in response to questions filed by PIC vice chairman Kimani Ichung’wa.
Mr Ichung’wa sought to know why the authority had “hoodwinked” the public that it had settled cases regarding the ownership of World Duty Free shops at the Jomo Kenyatta and Moi International Airports last year.
“You misled the public and told the entire world that you had settled all the cases with Mr Pattni. Do you have any consent recorded in court settling the matters? If not what will KAA do if Pattni moves to court to secure orders compelling you to pay the billions?” Ichung’wa asked.
In one of the cases No 45 of 2015, the High Court made a finding in favour of World Duty Free granting sole and exclusive rights to operate duty free shops at JKIA and Moi International Airport amounting to Sh5.5 billion.
Diplomatic Duty Free based its case upon the claim of “sole and exclusive” rights to construct, furnish and commercially operate duty free shops at the airport by virtue of the agreement made on April 27, 1989.
The company sought enforcement of the arbitral award by Justice (rtd) E. Torgbor disputing the contract between KAA and Dufry International AG.
The authority said it had only made a provision for the Sh350 million legal fees in its books of account and not the awards to Mr Pattni’s companies.
“We have provided contingent liability for legal fees and not Pattni. We have a higher chance of winning the cases on appeal,” Patrick Chonde, the acting finance manager told the committee.
“For Pattni’s Sh4.3 billion, we have not factored it in our books of account. This arbitral award had not been brought to our attention as at June 2014,” Mr Chonde said.
Mr Kangugo told the committee that it took the intervention of Cabinet Secretary for Transport Michael Kamau to point out offensive clauses in an earlier cancelled agreement to run duty-free shops.
The annulled agreement for the development and management of a duty free retail master concessionaire that had been awarded to M/s Nuance Duty Free would have seen the concessionaire enjoy more contractual privileges that were not envisaged by the tender documents.
Mr Kamau drew the attention of KAA to contentious clauses that were not the intent of the authority.
The acting KAA MD said the agreement was reviewed before the new tender was awarded to Dufry International.
Mr Kangugo said KAA had launched investigations into the drafting of the agreement that would have favoured the concessionaire as opposed to KAA and that he had already sent Ms Catherine Kisila, the officer in charge of leases on compulsory leave pending investigations.
The committee vowed to summon any officer involved in the concession agreement and Pattni’s cases to shed light on the same.
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