Standard Chartered Bank in Frankfurt, Germany, rejected Sh785 million wired into a Central Bank of Kenya (CBK) account by Lake Turkana Wind Power (LTWP) as refund for excess pay from Kenya Power that is under a parliamentary probe.
The German lender rejected the refund for excess payment of idle power charges paid in 2018, citing lack of sufficient details of the ultimate beneficiary of the millions of shillings paid to the CBK account.
It also demanded supporting documents for the pay amid increased oversight by German financial regulator BaFin for money laundering breaches, which has seen lenders in the European country slapped with multi-billion shilling fines.
Parliament is currently investigating how Kenya Power made the excess payment to LTWP and why the utility and State officials have been hesitant to receive the money from the wind power producer.
The Marsabit-based power firm says it transferred the cash to the Frankfurt account in December after Kenya Power provided the CBK bank details for the transfer.
But Standard Chartered Bank in Germany rejected the cash and returned it to LTWP account amid claims it failed to meet the customer due diligence requirements, terming the cash transfer suspicious.
The power firm tabled in Parliament a letter it sent to Kenya Power, capturing its frustrations over the Sh790 million refund that few government officials want to be associated with.
The electricity generator has since December 23 contacted Kenya Power three times and the CBK twice in search of the required documentation to support the transfer of the overpayment.
The CBK has remained mum while Kenya Power shifted the burden to the Ministry of Energy in a terse letter sent to LTWP on January 27.
“LTWP communicated to KPLC (via email) on 23 December 2021, that the payment had been returned and to provide an appropriate contact person at Central Bank of Kenya, or the additional banking information required,” Phylip Leferink, the chief executive of Lake Turkana Wind Power, said.
“We subsequently reached out to both again on 3 January 2021 and 12 January 2021 but with unfortunately no response received yet.”
Standard Chartered Bank in Frankfurt, Germany said it needed more details on the payment and the beneficiary, a letter tabled in Parliament indicated.
A senior banker in Kenya says the German bank had possibly declined the transfer because the ultimate recipient of the millions of shillings from the CBK was not disclosed.
He added that the CBK could also have declined to be party to the transaction involving the overpayment, which has raised more questions than answers.
MPs have questioned an overpayment of Sh785 million in 2020 to LTWP for energy not consumed by taxpayers.
The payment followed delays in the construction of the transmission station to evacuate power from the 40,000-acre Loyalangalani wind farm in Marsabit County to the national grid.
The investor received 45,197,003 Euros (Sh5.7 billion in 2021) when what was due to it was 39,023,703 Euros (Sh4.9 billion), hence the excess of 6,173,296 Euros (Sh785 million).
LTWP commissioned its 310 megawatts power plant on January 27, 2017, but the government, which built the evacuation line, did not complete the works until September 24, 2019.
The probe comes on the back of changes at the electricity generator that pushed out CEO Jon Abbas Zaidi over allegations of financial misconduct.
His short tenure ended alongside the company’s chief finance officer Ashish Chadda.
The two were fingered for an alleged irregular pay from the firm’s coffers without the board’s approval, which saw PricewaterhouseCoopers (PWC) hired to do a forensic audit of the company’s books.
Mr Zaidi had replaced founding CEO Rizwan Fazal in November 2019 but was suspended from his role in July last year.
David Mwangi took over in acting capacity until Phylip Leferink was appointed new chief executive in October.
The committee chaired by Mvita MP Abdulswamad Nassir will tomorrow question Kenya Power’s executives over the difficulties in recovering the excess payments.
Kenya Power responded to LTWP on January 27, 2022, acknowledging receipt of communication about the inability to transmit the refund successfully due to a lack of complete bank details but passed the buck to the Energy ministry and the central bank.
“Please note the challenge has been shared with the Ministry of Energy requesting for additional details from the central bank,” said Kenya Power acting CEO Rosemary Oduor.
“We will communicate further details to you in due course on this matter.”
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