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"id": 188942,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/188942/?format=api",
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"type": "speech",
"speaker_name": "Mr. Michuki",
"speaker_title": "The Minister for Environment and Mineral Resources",
"speaker": {
"id": 183,
"legal_name": "John Njoroge Michuki",
"slug": "john-michuki"
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"content": " Mr. Speaker, Sir, first, regarding the observation that the Attorney-General's opinion was ignored, I want to assure July 17, 2008 PARLIAMENTARY DEBATES 1941 hon. Members that the State Law Office was fully involved and, indeed, a Senior Counsel from that office was a member of the restructuring committee that I have alluded to earlier. Secondly, after a detailed review of loans in question, the legal opinion was that though there were no formal guarantees, the loans in question were all properly due from the Government. Moreover, the agreement between the Treasury and the NBK was approved by the State Law Office. Thirdly, the claim that the bonds were issued by the NBK and were not supported by anything is incorrect, because the NBK could never have issued bonds to itself. The bonds were issued by the Central Bank of Kenya (CBK) on behalf of the Government. Mr. Speaker, Sir, to operationalize the transaction, the Ministry of Finance issued a cheque to the CBK instructing them to issue bonds to the NBK as a part of that restructuring. This was purely a book-keeping exercise to replace the non-performing loans with equivalent performing bonds, although non-negotiable or tradable. I wish to emphasize that even though the Government has now restructured these loans, the debtors will continue to be followed and, indeed, they are being pursued by the bank. In this context, a firm of lawyers has been retained to advise on these issues. To illustrate the Government commitment to pursue the debtors, hon. Members will recall the chase associated with these bad loans, where a former General Manager of the bank and Mr. Ketan Somaia were convicted and jailed, but were released on appeal. The entire transaction was done transparently, and was a subject of discussion with both the International Monetary Fund (IMF) and the World Bank. In addition, the consultants that advised on modalities for the restructuring was funded using pooled resources from the Government of Kenya, the World Bank and other donors. Mr. Speaker, Sir, I would like to conclude my Ministerial Statement by emphasizing that the Government only took responsibility, and restructured loans that it had initiated and the State Law Office and the Controller and Auditor-General had given the required approval. The issuance of the bonds was aimed at solving a problem that had persisted for many years, and which threatened to worsen if it could not have been finalised by the year 2007. As a sign of the success of this strategy, the financial position of NBK has stabilized and the bank is now able to effectively compete with others in the financial sector. In view of the sensitivity to the banking sector, I would like to respectfully urge hon. Members to be more circumspect in the future when discussing matters that could have a systematic impact on the financial sector. In other words, I am pleading for facts to be ascertained, because some remarks could cause runs on banks and cause problems to many people who rely on the banking system. With those remarks, I thank you very much."
}