Politics and policy
Suspended Transport secretary Michael Kamau (right), Nicholas Ndung’u
Ng’ang’a (centre) and Kata Matemu Kithyo in a Nairobi court on June 4,
2015 where they were charged with abuse of office. PHOTO | PAUL WAWERU
By BRIAN WASUNA, bwasuna@ke.nationmedia.com
In Summary
- Bank of Africa wants to recover Sh476 million it lent Kundan Singh Construction International Ltd., which controlled multi-billion shilling construction contracts during former president Daniel arap Moi’s regime.
Mid-tier lender Bank of Africa (BOA) has put the
construction firm that is linked to suspended Transport minister Michael
Kamau’s troubles under receivership, opening a legal battle that is
offering rare insights into the world of big tenders.
Kundan Singh Construction International Limited, a firm that
grew and thrived in the Moi era, went into receivership months after
the Ethics and Anti-Corruption Commission (EACC) accused it of colluding
with Mr Kamau to alter designs for the Sh2.6 billion
Kaptana-Kapsokwony-Sirisia Road with the aim of stealing project funds.
The bank wants to recover Sh476 million it lent
Kundan Singh, which controlled multi-billion shilling construction
contracts during former president Daniel arap Moi’s regime.
Details of Kundan Singh’s big-ticket public
contracts and its financial troubles have been laid bare in a suit in
which the construction firm is challenging BOA’s decision to place it
under receivership, arguing that the bank had reneged on an earlier debt
clearing deal.
The contractor also argues that the bank did not
notify it of the intended takeover, which risks stalling the Sh17
billion deals it has with Kenya, Tanzania and Zambia governments.
“In view of the negotiations that have been taking
place regarding liquidation of the outstanding debt, and in light of the
payments made so far, BOA’s actions are tainted with ill motives as
opposed to debt recovery,” Kundan Singh argues in a petition it has
filed in court.
BOA has appointed Kolluri Venkata Kamasatry as
receiver manager for the construction firm. Mr Kamasatry is also a joint
receiver manager at Karuturi, the troubled flower firm that India’s
ICICI Bank placed under receivership.
Mr Kamau on Thursday appeared before a Nairobi
magistrate to plead to abuse of office charges and was released on bail
pending the beginning of his trial.
The minister appeared in court a day after the High
Court declined to issue temporary orders stopping BOA’s takeover until
the suit is determined but set conditions for the lender’s management of
the construction firm.
Justice Eric Ogola ruled that it would be unfair to
stop the receivership on account of Kundan Singh’s claims that the firm
would be run down before giving the new managers time to recover the
debt.
Kundan Singh had not proven any claims of
oppression by BOA, the judge ruled, even as he stopped the bank from
terminating any of Kudan Singh’s ongoing contracts, sack any employees
or dispose of the firm’s assets.
Kundan Singh last week filed an application
claiming it had secured a buyer for assets worth Sh520 million owned by
its sister company Vista Windows and promised to use part of the
proceeds to offset BOA’s debt.
The construction firm’s directors also argued in
court that they had collected Sh150 million to pay part of the debt,
even as they pleaded for removal of the company from receivership.
The bank has opposed the application, arguing that
it is a mere trick by Kundan Singh to appeal Justice Ogola’s ruling and
should be dismissed. BOA says Kudan Singh could not sell Vista Windows’
property which is charged to Kenya Commercial Bank.
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