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NATION/Lucas Barasa - The government wants to pay a whopping Sh125 billion for the controversial Anglo-Leasing projects.

This, says Attorney-General Githu Muigai, will enable it to borrow money for day-to-day operations.

Prof Muigai told the Budget and Appropriations committee that this was the only way Kenya could access cheap money from abroad.

He said the money should be paid quickly to avoid accruing high interest.

The committee is headed by the Rev Mutava Musyimi .“The payments need to be made, if not they will attract high interest. The assets of Kenya may also be impounded,” the Rev Musyimi quoted the AG as having told his committee on Tuesday.

The payments, the Mbeere South MP said, would also enable the government to access cheap money from overseas through sovereign bonds.

“It would be difficult to access this money if we have this thing hanging on our neck,” the Rev Musyimi said.


Asked on Wednesday why the Anglo-Leasing contracts have to be paid, Prof Muigai said it had to be done because the country kept on losing the cases.

Universal Satspace Company and First Mercantile Securities Corporation had sued Kenya over the contracts.

“The cases ended… we appealed and lost. We went back to the lower court, but lost,” Prof Muigai told the Nation.

However, Prof Muigai said he could not give more details “due to the confidentiality tied with the sovereign bond.”

But the Rev Musyimi questioned why the Executive wanted Parliament’s approval before effecting the payments while it “can pay and then come to Parliament for approval”.

He said his committee was preparing a report on the AG’s presentation, which would be tabled before his committee and that of Finance for adoption.

“The position is that the committees need to meet and look at the report. If adopted, it must go to the floor of the House for debate.”

The principal sum for the two contracts with Universal Satspace Company and First Mercantile Securities Corporation is Sh1.58 billion ($17 million), but the figure is likely to rise once the interest accrued is compounded.

On December 20, last year, the government lost a suit against Universal Satspace Company in London and was ordered to pay $7.87 million - $7.6 million being the principal sum and $274, 431 interest accrued on that figure as of the date the ruling was made.

The court gave Kenya up to 4pm January 17 to have cleared the amount with interest accruing at a daily rate of $1,665.

Kenya had lost a similar case against First Mercantile Securities Corporation in Geneva on December 6, the previous year, where the Swiss court ordered it to pay the company $10.6 million and interest of Sh126,000 ($1,400) per day.

Universal Satspace was contracted to provide the government, through the Postal Corporation of Kenya, bandwidth spectrum and network operation and control services for a period of 10 years.

First Mercantile Corporation was to provide financing for the purchase of some satellite telecommunications equipment for PCK from Spacenet, an American company.

On Wednesday, the anti-graft agency said it would continue investigating criminal offences in the Anglo-Leasing cases despite the government request to pay up.

“The issue of payment arises from judgment in the court suits. It involves two contracts that have gone beyond judgment and arbitration. It doesn’t compromise our investigations,” EACC boss Mumo Mutemu said.