Dispute brews over hiring of private legal firms by Treasury

Attorney-General Githu Muigai. The Attorney-General’s office is at loggerheads with the National Treasury following  improper procurement of private legal services. PHOTO/FILE 

In Summary

• In November last year, the AG told the Public Investments Committee that there were numerous other transactions by government ministries in which his office was not properly involved, leading to losses of billions of shillings.

By MUTHOKI MUMO
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The Attorney-General’s office is at loggerheads with the National Treasury following  improper procurement of private legal services.


 

In at least two instances, Attorney-General Githu Muigai has admonished the National Treasury for failing to follow procedure in engaging private law firms.

According to the Constitution and the Office the Attorney-General Act, the AG is the primary legal advisor to the government, its departments and its agencies. Private legal firms may be engaged, but only with the AG’s approval.

Documents procured by the Nation show that Prof Muigai has taken the National Treasury to task for flouting these regulations. In one case, it brought on board private legal firms in the restructuring of Telkom Kenya and in the proposed plan to acquire Essar Ltd’s stake in the Kenya Petroleum Refineries Ltd (KPRL).

In 2012 and 2013, two shareholders of Telkom Kenya, the Government of Kenya and France Telkom, agreed to recapitalise and restructure the firm. The deal saw the government’s stake diluted to 30 per cent from 49 per cent.

According to a parliamentary report released last week, the AG was never consulted before the lawyers advising the Treasury on the transactions, Hamilton, Harrison and Matthews, were hired through direct procurement in 2012.

However, Prof Muigai later give his nod to the contract drafted by the advocates.

“The State Law Office was not involved in the initial stages of the transaction contrary to section 19 of the Office of the Attorney-General Act,” reads the parliamentary report.

In a March 2014 letter, the AG questioned the membership of Coulson & Harney law firm in the technical committee tasked with thrashing out the details of Essar’s divestment of its 50 per cent stake in KPRL.

Although the firm had earlier been hired to author a shareholder agreement between the government and Essar, the AG questioned its involvement in the present negotiations.

National Treasury Cabinet secretary Henry Rotich was asked to “reconsider the involvement of the law firm” or present evidence that it was procured appropriately.

“We have addressed your office on this matter of procurement of legal services on several other occasions and we will therefore be obliged if you instructed your officers accordingly,” said Prof Muigai.

In November last year, the AG told the Public Investments Committee that there were numerous other transactions by government ministries in which his office was not properly involved, leading to losses of billions of shillings.

“The AG wants to control the kind of lawyers who are procured, so that if something goes wrong, he can be able to tell the person accountable,” said Law Society of Kenya chairman Eric Mutua in an a telephone interview with the Nation.

But decisions to bypass the AG’s office may sometimes be made out of necessity.

In March 2012, the Treasury’s investment secretary Esther Koimett requested the Ministerial Tender Committee to approve direct procurement of Hamilton, Harrison and Mathews because she was short of time with impending talks between the government and France Telkom on the recapitalisation of the firm.

“Procuring the services through any other method is not feasible due to time constraints and the complexity of the issues at hand,” said Ms Koimett.

Lacks capacity

In both Telkom Kenya and KPRL deals, the Treasury opted to go with law firms that had historical knowledge of the transactions.

Mr Mutua said that although the AG’s office has the mandate and may wish to scrutinise every contract, it sometimes lacks the capacity to do so in a timely manner. He said that thresholds should be set up for the values of transactions that would require the State Law Office’s scrutiny.

Further, he argues that the AG should set up a pool of pre-approved lawyers from which government ministries and agencies can select representation if they need the input of a private legal firm.

Last year, the AG said he had set up a special unit within his office to advice ministries on investments.