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Economy

Taxpayers risk paying more Anglo Leasing billions

Amos Wako
Former attorney- general Amos Wako had declared the promissory notes legally fit. FILE PHOTO | NMG 

Kenya could be forced to pay more billions to firms linked to Anglo Leasing security contracts after it emerged that the Attorney-General’s office had cleared promissory notes tied to the deal

A former financial forensic auditor with the Ethics and Anti-Corruption Commission, Kevin Mwangi Njuguna, told the Anti-Corruption Court on Friday that former attorney- general Amos Wako had declared the promissory notes legally fit, adding that the move validated the debt instruments. A promissory note is a financial instrument that contains a written pledge by one party to the other for payment of a defined sum of money, either on demand or at a specified future date.

Infotalent had secured a multi-billion-shilling tender to supply the police service with communication equipment, but the contract was cancelled in the middle of full delivery after the State termed it irregular.

This could force the firm to sue for payment of the billions because the promissory notes are not revocable, the court heard.

“Hon Wako while giving the legal opinion stated that he had looked at the relevant laws including the external loans and credits Act,’ said Mr Njuguna.

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‘By signing such an opinion, he committed the government into honouring such instruments as per the terms of the contract.”

Mr Wako, now the Busia Senator, had earlier told the court that each promissory note constituted an unconditional promise from the government to pay on demand the sum stated in the notes. This could expose the government to a fresh compensation suit.

President Uhuru Kenyatta was fin 2014 forced to authorise the payment of $16.4 million (Sh1.7 billion) to two companies, including Mercantile Finance Corporation of Switzerland.

The firms had secured court orders in Geneva and London requiring the government to settle unpaid debts, even though they had not delivered the contracted goods and services.

The Sh1.7 billion contracts had been issued and later cancelled. The Swiss company gave the government an ultimatum to either pay up or have its properties abroad attached or auctioned.Non-payment of the debt had blocked Kenya from issuing the debut Eurobond in 2014 on poor credit worthiness report, forcing the government to pursue a negotiated settlement

Mr Njuguna was testifying in a case where former government officials and local business persons have been charged over the multi-billion shilling Anglo-Leasing contract, which the government later cancelled.

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