BY OLIVER MATHENGE
December 3, 2015
Kenya is set to pay businessman Kamlesh Pattni Sh7 billion following the forcible eviction of Duty Free Shops associated with him from Kenyan airports.
According the Public Investments Committee of the National Assembly, Kenya is also set to spend another Sh10.5 billion in arbital awards and legal fees.
In a report on the issue, the PIC says, various officials led by former Kenya Airports Authority CEO Stephen Gichuki should be held personally liable for the loss.
The PIC said that Gichuki alongside former KAA MD Lucy Mbugua, former Transport CS Michael Kamau and the Attorney General's office failed to prevent the loss through their actions.
"This has led to an exposure of public funds of not less than Sh17.15 billion arising from the arbitral awards, high court rulings, interests, professional legal fees and damages from forceful eviction of World Duty Free," the report says.
The report says that Gichuki should be held personally criminally/civilly liable for abuse of office by executing the forceful eviction of duty free shops at night using hired goons.
It adds that he did this without taking due consideration of the legal and financial implication of the action on KAA and the businesses operating at the duty free shops.
"Through his action, Kenya public stands to lose not less than Sh7 billion which World Duty Free is claiming for loss incurred during forceful eviction," the report says.
The PIC also reports that the Attorney General was not consulted by KAA in the drafting and reviewing of the contracts between KAA and Dufry International AG, in the Arbitral Award of Sh4.3 billion to World Duty Free Ltd.
The report also says that the lawyers who represented the KAA in the matter "did not act in the best interest" and instead slapped the Authority with a hefty legal fee of Sh350 million.
The KAA legal team was led by senior counsel Fred Ngatia, who the PAC says has already received Sh60 million as part of the fee.
"The Committee recommends that KAA reviews Fred Ngatia’s contested fee note of Sh 290 million with a view to making payment only for true and actual services delivered having so far been paid approximately Sh 60 million," the report says.
On August 1, 2013, KAA demolished duty-free shops and lounges belonging to Pattni at the Jomo Kenyatta International Airport, Wilson Airport and the Moi International Airport in Mombasa.
At JKIA, 13 shops and 2 lounges were demolished.
Luxurious goods that included expensive perfumes, watches, clothes, travel bags, wines and whiskeys, cameras, iPhones, iPads were looted by goons who had allegedly been hired by KAA.
PIC says that the awarding of the contract for the Duty Free Shops was shrouded in bribery allegations and should have therefore not existed.
"The KAA management purposefully designed and signed a flawed contract document with contentious clauses and it took the intervention of the Transport CS to force a revision of the clauses, which has led to signing of a new Agreement," PIC says in the report.
The report however blames Kamau for failing to follow up on his public pronouncements on September 16, 2013 that the cases filed by World Duty Free and its associates would be withdrawn.
"The Deed Settlement Agreement between KAA and WDF was never concluded in full because neither of the parties fulfilled the pre-conditions to meet their part of the bargain. This has contributed to the current stalemate," the PIC says in the report.
The PIC recommends that the AG takes over as a matter of national interest all the cases that were being handled by external legal team and ensure that a Deed Settlement Agreement between KAA and WDF is quickly concluded in an amicable manner to protect public interest.
The PIC also says that the allocation of space to Duty Free Shops at the new Terminal 1A may also have been done in total disregard of procurement laws and procedures.
"The spaces at Terminal 1A have been allocated to another company, namely Maya Duty Free Ltd on the pretext of temporary licence which expired on September 2014 and renewed under unclear circumstances," the report says.
PIC has asked EACC to investigate the allocation of duty free shops spaces at Terminal 1A to Maya Duty Free Ltd. or any duty free operators, "which seems to have been undertaken in total disregard of procurement laws and procedures."
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