By: MUGUMO MUNENE
The Law Society of Kenya has issued an ultimatum to Treasury Cabinet Secretary Henry Rotich to explain in detail how the billions of dollars borrowed in the international market through the Eurobond were spent.
In a letter to the Cabinet Secretary, the lawyers’ umbrella body has revived the contentious debate on how the Sh275 billion raised was spent, threatening court action to block the government from any further foreign borrowing if no explanation was forthcoming.
“Going by the report by the Auditor-General, it is clear that the proceeds from the Sovereign Bond were not deposited or paid into the Consolidated Fund,” wrote LSK Chairman Eric Mutua.
“This is not only negligence in handling of public finance but a serious violation of the Constitution.”
The lawyers say they will seek orders from the courts that Mr Rotich and Principal Secretary Kamau Thugge be held personally liable for any funds lost and be declared unsuitable to hold public office if they will not have given a full account by November 30.
The lawyers have cited what they say are glaring gaps in the National Treasury accounts on how the billions borrowed through the Irish Stock Exchange were allocated.
The LSK cites a Sh38 billion omission, which is not reflected by the Controller of budget and which they say Mr Rotich must fully account for.
Mr Rotich told Parliament earlier that the money was used to pay off older loans and to fund infrastructure projects in various government ministries.
He said that it had been put to good use, arguing even the Auditor-General had not raised any questions on accountability after balancing the books.
“The balance of actual net proceeds from the sovereign bond is correctly reflected in the off-shore account and in the Central Bank of Kenya Special Account,” Mr Rotich told parliamentarians.
But the LSK, dissatisfied with that explanation, has cited glaring omissions in the Treasury’s explanation, which they say show that Mr Rotich has failed to account for billions of shillings.
It’s on that basis they plan to move to court.
NO ECONOMIC CRISIS
And in a move likely to throw a spanner in the works of Jubilee’s financial plans, LSK says it will also be requesting the courts to bar the government from borrowing further from the international markets.
Contacted by the Sunday Nation, Mr Mutua said the society was determined to get to the bottom of the matter.
“If he does not account, we shall have him declared unsuitable to hold office; hold him personally liable together with the PS for any monies that may be unaccounted; and stop any other moves by the government aimed at raising money abroad.”
Mr Mutua cited the section of the LSK Act that mandate the society to assist the government and the courts on legislation, the administration of justice and the practice of law as well as in upholding the Constitution.
“All indications are that it’s ending up in court. There are issues that must be determined by the court, not him and not any third party. Remember that we are using their own documents to raise issues. Unless they manufacture other documents those set of facts can never change. On the 15th day (when the ultimatum lapses) day we shall file suit,” Mr Mutua said.
Last month, activist Okiya Omtatah wrote to Mr Rotich demanding an explanation on the use of the funds but not much has been heard of the efforts.
The Jubilee government has been facing a cash crunch in the last few months with claims of delayed transfer of funds to county governments but President Uhuru Kenyatta and Mr Rotich have insisted there was no economic crisis.
Last week, the Sunday Nation published a special report citing suppliers and contractors who say their businesses have suffered greatly due to delay in pay for work done or goods delivered.
Last year, President Kenyatta promised that the proceeds of the Eurobond would reduce interest rates and be used in development projects.
Treasury officials who have spoken to the Sunday Nation in confidence because of the sensitivity of the matter, admitted that the economy was struggling and the country was saddled with huge levels of debt.
They say that the Eurobond had not been properly accounted for and that there had been an outright breach of the Constitution in the application of the funds.
They cited the admission that part of the money was initially spent without the approval of the controller of budget.
SOURCE: DAILY NATION