Economy

Taxpayers risk Sh1.2trn burden from government court fights

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Attorney-General Paul Kihara Kariuki speaks on August 10, 2018 during the Law Society of Kenya annual conference. PHOTO | KEVIN ODIT | NATION MEDIA GROUP

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Summary

  • The claims from ongoing litigation in local and international courts have increased 48.2 percent from Sh809 billion at the end of May 2019.
  • Legal awards against the State highlight the heavy price taxpayers pay for unlawful decisions by officials.
  • The Sh1.2 trillion is equivalent to 75 percent of the Sh1.6 trillion that the Kenya Revenue Authority (KRA) collected in taxes and 40 percent of the country’s total budget of Sh3 trillion.

Taxpayers risk paying up to Sh1.2 trillion as compensation for contract breaches, unlawful dismissals, human rights violations and other court disputes, highlighting the heavy price of unlawful decisions by government officials.

The claims from ongoing litigation in local and international courts have increased 48.2 percent from Sh809 billion potential liability exposure at the end of May 2019.

The exposure adds to the Sh150 billion that has been awarded against the government but is yet to be paid out, Parliament’s Budget and Appropriation Committee revealed last week.

“These range from awards to victims of torture as well as business litigations against the State,” says the committee. The State department for livestock is, for instance, yet to pay out Sh4.025 billion as historical pending bills that were awarded by the courts.

Legal awards against the State highlight the heavy price taxpayers pay for unlawful decisions by officials.

The Parliamentary committee did not provide a detailed breakdown on the amounts owed to individuals, local or international firms.

The Sh1.2 trillion is equivalent to 75 percent of the Sh1.6 trillion that the Kenya Revenue Authority (KRA) collected in taxes and 40 percent of the country’s total budget of Sh3 trillion.

The committee said that the office of the Attorney General and department of justice is "significantly underfunded", weakening the ability of the State to assemble a strong legal team to successfully handle the law suits.

700 lawyers

Kenya had last year engaged 700 lawyers from the State Law Office to battle a huge backlog of such cases in local and international courts.

The government has also been sued by former public servants for wrongful dismissal, resulting in payments of millions of shillings in costs.

Other suits are the product of fallouts over business deals.

Attorney-General Paul Kihara last year asked ministries, departments and agencies (MDAs) to carefully negotiate and vet contracts before signing to minimise lawsuits.

"To reduce exposure of MDAs to financial risk in contracts, all contracts should be negotiated and vetted to reduce instances that result in breach of contracts on the side of government," Mr Kihara said.

He called for penalties against top government officials found to have made unlawful decisions that led to the huge payouts. Some of the awards against the State have stemmed from unlawful arrests and reckless shootings by the police.

In 2019, the Treasury released Sh888 million to compensate survivors of State torture and cruelty.

The funds were released between June and December 2019 to cover for 52 cases of survivors who had successfully sued for compensation over inhumane treatment decades back.

The government is also spending huge sums of money contracting foreign lawyers to represent the country in international courts.

For example, reports by the AG’s office showed that in the 2017/18 and 2018/19 fiscal years, Kenya spent Sh9.22 million and Sh210.2 million respectively on legal fees on international cases.

State torture

More than 400 Kenyans, including lawyers, politicians, journalists, former university lecturers, former student leaders, police officers and military officers, have gone to court and successfully argued that they were tortured by State officials during the Daniel Moi presidency.

Among prominent people waiting for compensation from the government is the family of Kenya’s first African mayor and second liberation hero Charles Rubia, who died last year.

He was awarded Sh26 million last year for being arrested twice and illegally confined during the Moi era.

The family of former Cabinet minister Kenneth Matiba is also seeking more than Sh1.5 billion that the multi-party hero was awarded for torture during the same era. The award was initially Sh978 million but interest has been accruing.