The office of Auditor-General has faulted City Hall for failing to repay a Sh4.4 billion loan owed to the KCB Group #ticker:KCB days after the lender got a nod to auction Nairobi County over the debt.
Auditor-General Nancy Gathungu said the Ann Kananu-led administration failed to provide an explanation on why repayment for the loan was halted.
In her report for Nairobi County Executive for the financial year ended June 30, 2020, Ms Gathungu said City Hall has not been repaying the loan, with the outstanding balance rising to Sh4.4 billion.
“Management has not explained why repayments for the loan were halted. My opinion is not modified in respect of this matter,” said Ms Gathungu.
According to the Auditor-General, records at her disposal showed that the loan was acquired in October 2011 by the defunct Nairobi City Council with the original loan amounting to Sh5 billion secured from Equity Bank Kenya Ltd #ticker:EQTY .
Over the years, repayments were made decreasing the outstanding balance to Sh3.36 billion as of March 2014.
Thereafter, City Hall sought and obtained refinancing of the loan from the KCB in September 2014 but the loan statement issued by the bank indicated that the county executive was not repaying the debt, and as a result, the outstanding balance had risen to Sh4.4 billion by June 30, 2020.
Two weeks ago, the High Court cleared KCB Group to seize and auction the assets of Nairobi County over the debt.
This is after Justice Chacha Mwita dismissed the county government’s application challenging the amount awarded by an arbitrator in November 2019 arguing the law demands that an arbitral award be recognised as binding and enforced after the court’s approval.