Anglo leasing Scum and Kimunya---kibaki Government

From: Obeng Bash

Kenyans Should wisen up and not give these guys a second chance, Especially if it would be their final Term

Exposing The Deceptions Of The Minister For Finance Mr. Amos Kimunya On The 18 Anglo Leasing Type Contracts Worth Sh. 56.33 Billion May 8th, 2007

This morning, Wednesday May 9th 2007, Mr. Amos Kimunya refused to table any documentation related to the 18 Anglo Leasing type contracts, which have exposed 34 million Kenyans to an unconscionable debt of Ksh 56.33 billion. The Minister has failed the accountability and transparency test in Parliament and demonstrated that he does not care a jot whether or not the economic crime, called Anglo Leasing, is allowed to visit injustice on tens of millions of innocent Kenyans. Worse still, Mr. Kimunya appears to be more concerned with protecting the interests of a few Kenyans and others who have enriched themselves at taxpayer’s expense. The question is, why did Mr. Kimunya last week display on television what he claimed was proof that Kenyans have no cause to worry about unconscionable debts and a week later refuses to table the same documents in Parliament. What are the Finance Minister and the Treasury hiding from Kenya’s Parliament? Was the television display a hoax? It is time for Kenyans to hold, as an initial step, the Minister of Finance, Mr. Amos Kimunya and the Attorney General, Mr. Amos Wako personally responsible for these unconscionable debts.

Having closely read the Hansard of the contribution of the Minister for Finance, Mr. Kimunya, in Parliament on Wednesday May 2nd 2007, and having cross-referenced and checked this contribution with the Report of the Controller and Auditor General of April 2006, the available entries in the External Public Debt Register and Mr. Kimunya’s statements on the Anglo Leasing type contacts on February 1st 2007, we feel constrained to point out that it is crystal clear the Kenyan people are being and have been mislead by Mr. Kimunya. The following matters arise out of Mr. Kimunya’s statements on the following 18 contracts of so-called Anglo Leasing type:
Kenya Prisons Telecommunications Project Phase I (1997):
Mr. Kimunya said in Parliament that this project was completed and fully paid for. The C&AG says it was worth US$ 24.6 million. The question that Mr. Kimunya’s preferred auditors PriceWaterhouseCoopers will presumably address is whether or not the Kenya Prisons department has a digital multi-channel security telecommunications network.

Kenya Police Airwing I (1998):
In 1998, the Police bought 4 Russian Helicopters (Mi. 17) from a company called Sound Day Corporation for US$ 36 million. As will be seen these are very expensive helicopters. The money for this purchase was supposedly advanced to the Government by a financier called Apex Finance Corporation. The trouble is both Sound Day and Apex are listed by the Controller and Auditor General as non-existent. Each of the helicopters cost US$ 9 million – overpriced according to the Controller and Auditor General who believed Kenya should have paid no more that US$ 5 million for each helicopter. Scrutiny of the External Public Debt Register (EPDR), where all external loans are recorded, shows that indeed, as Minister Kimunya told Parliament the debt of US$ 36 million has been paid in full. However what Mr. Kimunya does not tell us is that the creditor listed in the EPDR is not Apex Finance. In fact the debt was owed to a bank called J.S Schroder. The non-existent financier (Sound Day) that allegedly lent Kenya the money to buy these helicopters discounted the debt and handed over the irrevocable promissory notes to J.S. Schroder which collected. If Kenya was actually lent money, this would be a moot point. But how can we be sure that a non-existent financier actually lent us any money? If it didn’t why did we repay at all?

Export Lease Purchase of Leyland Vehicles for the Police (2001): Mr. Kimunya says the project was cancelled and irrevocable promissory notes issued were returned together with a refund of the commitment fee of Ksh 72.8 million. The Controller and Auditor General’s report highlights something else that is significant. After looking at all the project and contractual documentation he dryly notes “amount paid not known.” Presumably, PWC will be able to find out how much of the US$ 90 million “loan” was actually advanced to Kenya, by the stated financier Silverson Establishment, in return for which the irrevocable promissory notes Mr. Kimunya is holding were issued. Kenyans will also be interested to find out how much was actually repaid to Silverson Establishment in order to determine whether or not we should be satisfied with the return of Ksh 72.8 million.

Forensic Science Laboratory (2001):
This is one of the better known fictitious credits and projects. In the first year of the Millennium the idea was hatched to build a forensic science laboratory for the Police Criminal Investigation Department on Kiambu Road (next to the current CID HQ at Mazingira House). Not even a ground breaking ceremony was performed, yet irrevocable promissory notes worth US$ 54.56 million were issued to the so called financier Anglo Leasing and Finance Limited in August 2001. The Controller and Auditor General notes that despite no work being done the Government dutifully repaid the loan to the tune of Ksh 375.285 million. The latter amount is claimed to have been returned in June 2004 and paid into the mysterious Special Miscellaneous Account of the Treasury. On this contract, Mr. Kimunya should tell Kenyans whether or not there was any credit advanced by Anglo Leasing and Finance Limited to the Government that justified the issuing of over Ksh 4 billion worth of irrevocable promissory notes. He should also tell Kenyans who returned the notes he claims to be holding, and show us evidence that whoever they are have indemnified the Government from any obligations related to this bogus contract. He may also wish to comment on whether it is likely that a real financier would simply return its loan security to the Government of Kenya or whether, as is far more logical, there never was any loan in the first place. It should be noted that the Controller and Auditor General definitively states that Anglo Leasing and Finance Limited is a ghost.

Kenya Prisons Security and Telecommunications Project II (2002): According to the Controller and Auditor General’s report of April 2006 the lender of money for this project to the Government is called LBA Systems. A search of the best known LBA Systems on the internet finds a company in Scotland which specializes in the manufacture of lightweight body armour (bullet proof vests). Though it lists the Kenya Police as a client, it does not claim to have worked with the Kenya Prisons. Also unusual is the fact that this particular contract is to be found in the External Public Debt Register as of June 30th 2006, even though Mr. Kimunya claims that there is no exposure. In total as of the end of June 2006, the Government had repaid Ksh 572.832 million to LBA Systems. Was there ever a loan? More alarming is that as of the end of June 2006, it was recorded in the external debt register that Kenya still owed LBA Systems Ksh 2.556 billion.

Kenya Police Equipment Supply Contract Addendum II (2002): Sound Day Corporation features again as the alleged lender of US$ 30 million to the Government of Kenya to buy “various security equipment.” As noted elsewhere, the Controller and Auditor General considers Sound Day Corporation to be a ghost company. Today, Sound Day Corporation has been replaced as the creditor entered into the EPDR by Midland Bank to whom Ksh 14.857 million is still owed debts arising from this contract are now owed. Obviously the irrevocable promissory notes issued to Sound Day Corporation have been discounted (sold) to Midland Bank, which has now approached the Government as a legitimate creditor. Remember Midland Bank was not privy to the contract between the Government of Kenya and Sound Day Corporation. Mr. Kimunya has said that payments were stopped in 2005 and that he will refuse to make payments if they fall due. How does he explain the fact that the external public debt register records post suspension payments (albeit small) during the year 2006?
Outstanding as of:
30.06.2003: Ksh. 1,112,500,500
30.06.2004: Ksh. 298,173,000
30.06.2005: Ksh. 15,324,946
30.06.2006: Ksh. 14,857,268

Is there any proof that Sound Day Corporation actually lent the Government of Kenya any money to justify continuing to service the “loan”?

Meteorological Department Early Warning System (2002): Again LBA Systems is recorded in this contract as having lent the Government of Kenya US$ 35 million to set up a radar and nationwide early warning system. The loan is now held, according to the EPDR by the reputable Midland HSBC Bank. It is clear from the EPDR that payments on this finance contract have been made during 2005/6. Thus the amount owed as of June 30th 2006 was Ksh 1.35 billion down from the previous year’s amount owed of Ksh 1.4 billion as of June 30th 2005. The table below records these payments:
Outstanding as of:
30.06.2003: Ksh. 1,752,188,288
30.06.2004: Ksh. 1,461,047,700
30.06.2005: Ksh. 1,400,277,900
30.06.2006: Ksh. 1,357,545,000

Kenya Police Equipment Supply Addendum III (2002): Here Sound Day Corporation (non-existent by all accounts including that of the Controller and Auditor General) purportedly lent the Government of Kenya US$ 31.846 million to buy security equipment for the Kenya Police from Sound Day Corporation (presumably the same non-existent company). As of 30th June 2006, the Government of Kenya’s own EPDR records show that the debt is held by a bank called J.S. Schroder. Obviously, it has bought the irrevocable promissory notes or debt instruments that were given to Sound Day Corporation by Mr. Kimunya’s predecessors at the Ministry of Finance in May 2002. Mr. Kimunya says there were no promissory notes issued with respect to this project and that it is a carry over from the previous government. This does not excuse his government for making payments as hereunder listed – even after the so called suspension in 2005:
Outstanding as of:
30.06.2003: Ksh. 1,522,574,436
30.06.2004: Ksh. 743,166,385
30.06.2005: Ksh. 712,255,640
30.06.2006: Ksh. 690,519,420

Postal Corporation of Kenya (2002): These contracts are analysed in full in a report by Mars Group Kenya entitled VSAT@Posta which can be read online at www.marsgroupkenya.org. However, it should be noted that they involved the use of financing through a “deferred payment agreement” and also the cost of the equipment bought was less than half of the cost of installation. Furthermore, the financier known as First Mercantile of Switzerland who allegedly loaned the Government of Kenya US$ 11.8 million to implement this project does not exist according to the Controller and Auditor General. Yet, the Government has repaid as at June 30th 2005, Ksh 533,666,452 on principal and interest of Ksh 3.9 million. What Kenyans want to know is did the non-existent financier lend the Government any money at all? Additionally, who is now holding this debt?

Police Helicopters Maintenance Contract (2002):
Recalling that 4 Russian Mi. 17 helicopters were bought in 1998, this contract involves the same two non-existent financiers and suppliers (Sound Day Corporation and Apex Finance Corporation respectively) which in 2002 were back in business with the Government of Kenya. This time around Apex Finance purportedly lent the Government US 12.8 million (one third the price of the 4 helicopters which were by then grounded). It should also be recalled that the Controller and Auditor General had stated that each helicopter was over-priced by a minimum of US$ 4 million each (Ksh 280 million each). Put simply the Government of Kenya borrowed money from a fake financier to buy over-priced helicopters from a fake company and three years later allegedly borrowed money (equivalent to one third of what it borrowed to buy the helicopters) to pay a fictitious company to service and maintain the same Kenya Police helicopters. They reportedly no longer fly. As at June 30th 2006, this debt was held by J.S. Schroder Bank to the tune of Ksh 346.9 million. In 2003, the outstanding amount to J.S. Schroder was Ksh 695.68 million. The Kibaki government paid about Ksh 350 million shillings on a bogus contract to a bank that is not a signatory to any of these contracts. The contracted parties (Apex and Sound Day) must have discounted the debt to J.S. Schroder. Mr. Kimunya’s parliamentary and public statements are completely mum on this point.

Project Nexus (2002):
This contract is in litigation in Europe and has led to the attachment of the Kenya Embassy building and other real property and assets. The debt is held by a French bank, Credit Agricole and not Nedermar Technologies (a company incorporated in a Caribbean island, famous as the location for the filming of the movie Pirates of the Caribbean, St. Vincent and the Grenadines) which was contracted to build and finance the construction of the Karen Department of Defence centre. The litigation in Europe has been brought by Nedermar who was the contractor but no longer holds the debt which still stands due to the tune of Ksh 2.35 billion as of June 30th 2006.

Navy Ship (2003):
Not many Kenyans know that there are actually three contracts involved here. The Government, in July 2003, entered into an agreement with Euromarine Industries to build and deliver an oceanographic vessel to the Kenya Navy; simultaneously it entered into financing agreements with two Spanish financiers (Navigia Capital International Limited and Impressa de Financas). At present the debt is held by another party namely, Credit Lyonnaise Bank who holds the debt and instruments given to the first three companies that signed contracts with GOK in July 2003. The Government of Kenya has been paying as hereunder:
Outstanding as of:
30.06.2003: Ksh. 0
30.06.2004: Ksh. 4,057,624,812
30.06.2005: Ksh. 3,889,071,954
30.06.2006: Ksh. 3,968,876,331

Last week, the Parliamentary Committee for Defence matters led by G.G. Kariuki, was reported to have cleared the way for repayment of the debt owed to Credit Lyonnaise Bank. According to the EPDR, the terms of the loan which Kenyans will now pay are as follows: “Loan of Euro 51,997,000 co-financed by Euro Marine Impressa and Navigia repayable commencing July 31st 2003 and ending 31st October 2010.” Kenyans now owe Ksh 3.968 billion for this ship.

Administration Police Telecommunications Network (2003):
Midland Finance and Securities Limited, ostensibly of Geneva Switzerland, non-existent according to the Controller and Auditor General is the contracted financier in this agreement. It allegedly lent the Government of Kenya Euros 49.65 million (Ksh 4.4 billion). By the end of June 2006, the people of Kenya were stated to owe Midland Finance and Securities Limited Ksh 3.185 billion. Kenya is committed to pay US$ 2.5 million every three months until June 29th 2009. On this contract Mr. Kimunya said to Parliament, on May 2nd 2007 that the project is worth Ksh 4.423 billion, and further “this project has never started and is still subject of protracted issues. No promissory notes were issued against this project. There is no refund against the said project because no payments were made.” This is untrue. The same debt is recorded by the Controller and Auditor General as including payments (as of June 30th 2005) of Ksh 613,500,529.60 being the principal and Ksh 74,225,411.90 being interest. In total the Government has paid Ksh 687,725,491.50 for a project that never started. It is not true that no payments were made. The Minister lied to Parliament. Corroborating the Controller and Auditor General is the fact that the debt is recorded in the external public debt register with amount repaid on the so-called loan as of June 30th 2005 being Ksh 613,500,530 (a difference of 40 Kenya cents!). Note, Globotel Incorporated, the contractor and the financier, Midland Finance and Securities are said by the Controller and Auditor General to be non-existent.

Kenya Police Law and Order (E-Cops) Contract (2003):
Infotalent, ostensibly from Switzerland, refunded over 500 million shillings to the Government in June 2004. It remains a mystery who is behind this refund as the Controller and Auditor General stated the company was not registered in Switzerland. The refund is said to have come fro J.S. Schroder Bank.

The Passport Contract (2003):
Here the supplier and financier were both non-existent. The question being asked is who refunded Ksh 93 million in June 2004, just as investigations by John Githongo and the Kenya Anti Corruption Commission were started. There is no evidence that the Government of Kenya received the stated loan amount of Euro 31.89 million and it is safe to say the debt was fictitious and created only to obtain or issue 23 irrevocable promissory notes with fraudulent intent. The Minister of Finance has not addressed this fraudulent credit and has dwelt at length on the purported return of what in truth is only the 3% commitment fee plus interest.

Police Equipment Modernisation Contract (2003):
Mr. Kimunya told Parliament on May 2nd that this project was cancelled and that no refund was needed. In fact this is not true. The Controller and Auditor General clearly states that by June 30th 2005, the Government of Kenya had paid Ksh 115,407,160 to non-existent entities namely Sound Day Corporation and Apex Finance Corporation. Presumably, they still have this money. What worries is that Mr. Kimunya tells us nothing of the financial contract whose total value is Euro 40 million (Ksh 3.56 billion). He gives no evidence of this amount ever having been credited to the Government of Kenya. What Kenyans need to see from Mr. Kimunya is the irrevocable promissory notes worth Euros 40 million accompanied by a discharge note freeing the Government of Kenya from any legal liability on this project.

Flagstaff NSIS Counter Terrorism Centre (2004):
A Google internet search does not find any financier called Ciara Systems in Columbus Ohio USA which allegedly lent the Government of Kenya US$ 41.8 million to build a new counter terrorism facility for the National Security Intelligence Service. However, the debt has appeared on our external public debt register in the name of Credit Lyonnaise Americas showing the amounts outstanding as follows:
Outstanding as of:
30.06.2003: Ksh. 0
30.06.2004: Ksh. 3,323,635,040
30.06.2005: Ksh. 3,185,394,080
30.06.2006: Ksh. 3,088,184,000
CLEARLY, PAYMENTS ARE BEING MADE DESPITE MR. KIMUNYA’S PROTESTATIONS.