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Kenya: Grand Regency Saga Stalls Road Financing Plan
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Business Daily (Nairobi)
8 July 2008
Posted to the web 9 July 2008
Jim Onyango
Nairobi
Finance minister Amos Kimunya's decision to step aside to allow for investigations into the controversial sale of the Grand Regency Hotel has left a vacuum at Treasury that analysts said could derail the Government's agenda in the new financial year.
Additional signs that the hotel crisis could affect government programmes came from Prime Minister Raila Odinga's statement to Parliament yesterday.
Mr Odinga, who made a personal statement on the saga, said he had received a call from the deputy director of the World Bank informing him that the that financing of the Northern Corridor road that was to go before the board for approval on Thursday had been removed from the agenda because of concerns over the Grand Regency affair. The project is worth Sh4.3 billion.
Mr Odinga said other development partners such as the European Union had also expressed concern over the sale and were looking forward to a speedy conclusion.
These concerns from development partners add to last week's warning that a stand-off between the executive and Parliament over the matter could negatively affect Treasury's ability to push through key Bills in the House.
Top among the pending matters are the Finance Bill that contains proposed taxation measures and expenditure programmes in the new financial year.
The Grand Regency saga erupted just after Mr Kimunya had tabled before Parliament a motion seeking authority to incur debt for purposes of financing the restructuring and refurbishment programmes at the port of Mombasa.
The motion, which had gone through the second reading has been stuck in the House unable to move to the next stage after Parliament made an historic decision to pass a vote of no confidence in the Finance minister.
The entanglement of Mr Kimunya, who has been the key mover of Kenya's economic agenda, in the Grand Regency affair is also expected to negatively affect the country's credit rating and with it the success of plans to float a Eurobond to finance key infrastructure programmes.
Fears of a possible vacuum at Treasury arose from a statement by Government spokesman Alfred Mutua that no replacement would be appointed in Mr Kimunya's place.
"The Finance minister has been in discussions with the president over this," he said. "But he will not be replaced, it's only a temporary move," Mr Mutua told Business Daily.
This means that the position will remain vacant as long as investigations into Mr Kimunya's conduct are ongoing. Treasury is one of the very few ministries with executive function where a vacuum poses the danger of paralysing government programmes.
The minister's rider that he could not comment further on the matter because investigations had began also left many wondering what he was referring to since President Kibaki who is the appointing authority had not spoken nor released any statement explaining who the investigators were nor the nature of the investigations.
The International Commission of Jurists (ICJ) through its chairman, Mr Wilfred Nderitu, asked the State to explain the legal meaning of the term "to step aside". "It does not amount to a resignation and should have been done a week a go," he said.
Mr Kimunya becomes the second Minister of Finance in President Kibaki's government to stand down because of alleged involvement in a financial scandal.
His predecessor David Mwiraria-the first Finance minister in Kibaki's government - resigned in February, 2006, amidst claims of involvement in the multi-million dollar "Anglo Leasing" scandal.
Mr Odinga told Parliament that he was briefed on the sale of the luxury hotel in April and that full investigations on the matter is ongoing.
"I'm pleased that he (Kimunya) has stepped aside. This is an honourable action for which I commend him. This action is precedent setting. Investigations are ongoing and if the minister is found innocent in this matter, action will be taken," he said.
Lugari MP Cyrus Jirongo turned the heat on the Prime Minister saying that he should have led by example by stepping aside to facilitate investigations since he was aware of the sale and did not inform Kenyans in good time.
The Grand Regency hotel saga started two weeks ago when Lands minister James Orengo called a press conference and announced that the hotel had been secretly sold.
Mr Kimunya immediately dismissed Mr Orengo's statement and denied that the hotel had changed hands only to confirm the next day that the hotel had indeed been sold.
Step aside
Mr Kimunya's decision to step aside came as a surprise coming only two days after he swore that he "would rather die than resign."
Transparency International-Kenya chapter yesterday termed Kimunya's announcement that he will step aside, as a good beginning to the process of unravelling the truth in the Grand Regency saga.
"Parliament should enact the Freedom of Information law to open up such controversial contracts to public scrutiny" said Job Ogonda, the executive Director of TI-Kenya.
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Mr Kimunya's decision to step aside now turns the heat on Central Bank governor Njuguna Ndung'u, director General of the National Security Intelligence Services (NSIS) Major Gen Michael Gichangi - who the cabinet sub-committee set up to probe the sale recommended that they step aside.
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