NSSF pays millions for Kanu era deals

Lugari MP Cyrus Jirongo 

By  PATRICK MAYOYO pmayoyo@ke.nationmedia.com and JAINDI KISERO jkisero@ke.nationmedia.com

In Summary

• Pension savings used to pay for projects which either did not get off the ground or were not completed

The National Social Security Fund has controversially paid Lugari MP Cyrus Jirongo and a construction firm owned by a Ugandan businessman more than Sh830 million as settlement for incomplete housing projects from the Moi era.

According to documents seen by the Daily Nation, NSSF entered into a consent with Mugoya Construction and Engineering and S.K.Jirongo and Sololo Outlets as settlement in two separate cases they had filed against the pension fund.

Part of the released Sh800 million was to pay for incomplete projects cancelled years ago. The large payments were released after negotiations by way of out of court settlements.

In one case, the fund paid Sh342 million to Ugandan businessman James Isabirye of Mugoya construction Company for a project in which the contractor was supposed to build 265 housing units on a plot owned by the fund in Karen.

The houses were never built. But the contractor put in claims on the grounds that he had done some basic work before the project was cancelled.

NSSF defence in court has been that no payments were due because the contractor  proceeded to the site before he was asked to take possession of it.

Mugoya carried out excavations of the road boundary and cleared the site. As at the time of cancellation of the project in 1995, the NSSF had paid Mugoya Sh91 million.

It is for these minimal works that the workers body has shelled out the hundreds of millions.

Documents show that the original claim by Mugoya was for Sh663 million.

In September last year, the board authorized the management of the company to negotiate with Mugoya and reach a final settlement.

Subsequently, negotiations were held and the parties agreed to settle at Sh 342 million.

In the Sh 342 million consent NSSF entered with Mugoya Construction and Engineering, the Fund lawyer P.M.Bunde, said was in relation to a tender awarded to the firm for planned development of the Karen property at a cost of Sh 1,910,856,740.

The construction firm was to build 256 housing units, an administration block, club house, kindergarten and auxiliary buildings.

However, the project never took off because work started even before approvals had been granted by the Nairobi City Council. Karen/Langa’ata residents also opposed it.

“Subsequently, due to the above stated setbacks the project was cancelled on 2nd December, 1999. Consequently, in 2005 Mugoya Limited sued the Fund claiming Sh 663,323,620.30 plus damages, interest and costs,” the legal officer notes.

In the case concerning, Mr Jirongo, a letter written by NSSF Legal officer, P.M.Bunde, dated January 6, this year confirms that S.K.Jirongo and Sololo Outlets had agreed to be paid more than Sh 490 million, to settle the case.

“We are in receipt of a consent dated 22nd December, 2011, fully and finally settling the above stated matter at Sh 490, 850,090. The consent further provides that the cost of the suit be awarded to the Plaintiffs,” the letter says in part.

The NSSF legal officer says that the Fund entered into an agreement with the two parties in September 1992 for the development of a housing project at a cost of Sh 1.2 billion which was to be financed through PostBank Credit.