How Canadian miner lost Sh250bn Kwale permits


Jacob Juma. PHOTO | file

A Canadian company illegally acquired lucrative mining licences for Kwale County sites, leading to dismissal of its Sh250 billion claim against the Kenyan government.

The International Centre for Settlement of Investment Disputes (ICSID) found that Cortec Mining Kenya used its political connections to procure the licences contrary to the law.

“The claimants’ own evidence establishes that SML (special mining licence) was procured by their successful political lobbying of officials of the Kibaki government,” the tribunal said yesterday.

The firm associated with the late businessman Jacob Juma, alongside UK registered Cortec Limited and Stirling Capital, had filed the claim against the Kenyan government at the International Centre for Settlement of Investment disputes (ICSID) in November 2017 seeking compensation for loss of licences.

Cortec had before going for arbitration unsuccessfully fought the battle for the licences in Kenyan courts before moving to the ICSID.

The dispute began after the then Mining Cabinet Secretary Najib Balala revoked the licences that were issued to the Canadian firm in 2013 to explore minerals in Mrima Hills, Kwale County on grounds that the permits had been issued irregularly.

Cortec had estimated that deposits of nobium, used to make metal alloys for jet engines and to strengthen steel, were worth $600 billion (Sh60 trillion).

The tribunal observed that ‘the freshly elected Jubilee government was not bound either under domestic law or international law by a purported mining licence issued under political direction’ in disregard of Kenyan law.

Colossal sum

The arbitrators directed the firms to pay the Kenyan government Sh358.4 million ($3,548,990), being the legal costs incurred to defend the case, a big reprieve to the Kenyan taxpayers.

The colossal amount of the legal cost reflects the magnitude of the case and the calibre of law firms the government used to defend itself.

The charge will settle the payment to the firms of Iseme Kamau and Maema (IKM) Advocates and DLA Piper, which was retained by the government.

The three firms Cortec Mining Kenya, Cortec (pty) Limited UK and Stirling Capital Limited incorporated in England and Wales filed the huge claim against the government.

Cortec Mining Kenya is owned 70 per cent by Cortec UK and Stirling. In turn Cortec UK and Stirling is wholly owned by Pacific Wildcat, a Canadian company listed on Toronto Stock Exchange.

The award reveals a company that was using politicians and government officials to circumvent the legal requirements.

The tribunal observed that Cortec ignored key compliance with the laws necessary for granting of mining licences, noting that Mirima Hill is a forest reserve, nature reserve and national monument.

Political intervention

The firm in the process engaged the services of Mr Juma to seek political intervention after losing patience with the bureaucratic processes.

The path chosen by Cortec was not a legal one and the tribunal described the licences issued to the firm as scrap of paper issued by an irresponsible bureaucrat contrary to the law.

The documents show that Cortec secured the assistance of government officials among them former mining commissioner Lojomon Biwot.

Mr Biwott asked Cortec Kenya to engage the services of Harie Ndungu as agent to help them apply for the licence on May 5, 2012. On May 15, 2012 Mr Ndungu applied for the prospecting rights on behalf of the firm and he was granted the licence on the same day by Mr Biwott.

Strangely, the licence was granted even before the company was incorporated.
The two individuals behind the scheme are identified as Mr Anderson and Mr O’Sullivan.

Cortec also approached are the late John Michuki, Omar Zonga, a Member of Parliament from Kwale where Mirima Hills is, and then Prime Minister Raila Odinga.

The tribunal held that the hill was excluded from prospecting and mining under Section 7 of the Mining Act and it was necessary to obtain the consent from the Kenya Forest Service (KFS) and the National Museums of Kenya (NMK) as provided by the Forest Act and the National Museums and Heritage Act.