The National Treasury relied on a presidential fiat when it drew Sh1.4 billion from the Consolidated Fund on Monday to settle contentious claims by two Anglo Leasing firms, Parliament heard on Wednesday.
Treasury principal secretary Kamau Thugge told a parliamentary committee that his office released the payment on President Uhuru Kenyatta’s directive, which was communicated through an email from State House spokesperson Manoah Esipisu.
“I had the consent of Controller of the Budget and a directive from the President, but the law allows me to inform Parliament two weeks after the transaction in case it is in recess,” Dr Thugge told the Public Accounts Committee (PAC) on Wednesday.
“I did not wait for the President’s written and signed directive under seal as required by the Constitution because the payment was to be made urgently and Mr Esipisu had assured me it (signed directive) was on the way,” he added.
The office of the Controller of Budget has denied authorising the payments, saying the Treasury insisted on releasing the money based on Executive orders.
The exchange of communication among Dr Thugge, the State Law Office and the Controller of Budget Agnes Odhiambo two days before the money was released shows that Mrs Odhiambo had insisted on parliamentary approval before granting consent.
“We concur that the debt should be settled expediently in light of attendant risks … We, however, request you to urgently make parliamentary approval available to facilitate release of funds from Consolidated Fund,” Mrs Odhiambo says in her May 15 reply to the Treasury.
The Treasury paid the money in dollars to a UK bank account belonging to Travers Smith, a law firm, and H. Malik, the transaction advisor.
The two firms are associated with Irish businessman Anura Perera, one of the architects of Anglo Leasing contracts. “I can’t say we made payment to Mr Perera, but the law firms are his agents,” Dr Thugge said.
Just days after Members of Parliament openly resisted a request to approve the Anglo Leasing payments, Mr Kenyatta issued Executive orders on Sunday, instructing the Treasury to release the funds immediately.
The President said he had ordered payments to First Mercantile Securities Corporation (FMSC) and Universal Satspace because Kenya needed to put a stop to interest rate multiplication after it exhausted all legal avenues of appeal.
The money includes principal sums and interest accrued on a sum agreed by parties to the dispute following a court decision in favour of the claimants in Geneva and London.
The FMSC was awarded Sh722m ($8.3m) for termination of a contract to supply telecommunication equipment to Postal Corporation while Satspace got Sh705 million ($8.1m) for a contract to supply bandwidth spectrum and service it for 10 years, which was also terminated.
The contracts were part of the 18 projects the government signed with companies and individuals between 1997 and January 2004. The State paid Sh6.8 billion for completed contracts in 2007 and cancelled four valued at Sh18.9 billion that were yet to begin, recovering Sh1 billion it had paid upfront.
Last week, State House said it was at various stages of negotiating settlement for 11 contracts worth Sh30.6 billion, which were are at various stages of completion at the time.
Six of the partly completed contracts (valued at Sh16.6 billion) have been the subject of protracted negotiations even as Kenya maintains that the shadowy firms had overpriced the projects by Sh4 billion.
The PAC headed by Budalang’i MP Ababu Namwamba also wanted to know why the pending projects are not reflected on the Treasury’s books as part of public debt yet similar claims are likely to arise in future.
“For the cancelled contracts, we are certain that no claim can be brought against Kenya because the State Law Office prepared international adverts to that effect 10 years ago and nobody has ever challenged it,” deputy solicitor- general Muthoni Kimani told the PAC.
“There is, however, one firm out of the partly completed contract which has forwarded to us demand letters seeking payment,” she said.