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"id": 195654,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/195654/?format=api",
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"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Finance",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
"slug": "amos-kimunya"
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"content": " Mr. Speaker, Sir, on 23rd April, 2008, Mr. Imanyara sought a Ministerial Statement from the Minister for Finance regarding the Grand Regency Hotel. In, particular, he wanted to know whether Uhuru Highway Development Limited (UHDL) and Central Bank of Kenya (CBK) have sold, or are in the process of selling the Grand Regency Hotel to a company known as Meridian Arab-African Investment Company (MAAIC), and whether the Government of Kenya had agreed to withdraw all civil and criminal cases revolving around one Kamlesh Pattni and his companies. Mr. Speaker, Sir, arising from the above request, I wish to state the following:- (a) By way of background, in 1993, CBK created a legal charge for Kshs.2.5 billion over April 29, 2008 PARLIAMENTARY DEBATES 721 the Grand Regency Hotel in an attempt to secure funds that had been illegally siphoned through Exchange Bank during the infamous Goldenberg saga. The registered owner of the hotel and chargee is UHDL. (b) It is not a secret that the validity of the charge, and the ownership of the hotel in general, have been the subject of protracted and costly litigation for the past 15 years in the High Court, as well as in the Court of Appeal involving, amongst others, the Kenya Anti-Corruption Commission (KACC), Kamlesh Pattni, UHDL and CBK. Mr. Speaker, Sir, since 1999 when the bank's Receiver Manager, Mr. Joseph Kittony, was removed by the High Court and replaced with two receivers appointed by the High Court of Kenya, one of whom represented Mr. Pattni, the Central Bank of Kenya (CBK) has not received a single penny from the hotel. During Mr. Kittony's term as a Receiver Manager, the CBK had managed to recover a sum in the region of Kshs460 million from the operations of the hotel. Through court orders and injunctions, the CBK has, over the years, been totally locked out of the control and management of the hotel. In 2004, the Kenya Anti-Corruption Commission (KACC) and Uhuru Highway Development Company Limited (UHDL), by a consent court order, appointed two joint receiver managers for the hotel. The CBK, being the chargee, was not consulted in the appointment. Since the appointment, the two joint receiver managers spent most of their time fighting each other instead of professionally managing the hotel to the extent that the operations of the hotel almost grounded to a halt. It is an indisputable fact that due to the mismanagement of the once five-star hotel, it has not undergone any renovations or refurbishment over the years and, as a result, the standards of the hotel have inevitably fallen. In view of the problems bedeviling the hotel, the protracted and complex litigation over its ownership, and the important fact that the CBK has not been involved in the management of the hotel and has not even received a single penny from the operations of the hotel since 1999, it became necessary in the CBK's own interest, and in the general public interest, that the CBK takes urgent and decisive steps on the matter. Mr. Speaker, Sir, the hotel was last valued in 1997 for Kshs2.1 billion. The CBK, therefore, instructed two reputable valuation firms who have valued the hotel and advised the Bank on the hotel's current open market value. It was necessary to appoint two independent valuation firms to undertake the exercise in order to provide the Bank with realistic and independent comparative figures of the open market value of the hotel as it is today. The figures that were obtained from the valuation would be crucial in determining the sale price for the hotel. Mr. Speaker, Sir, the current status of the hotel, is as follows: First, following extensive consultations, which have been going on for the past eight months, and I repeat \"eight months\", on the 9th of April, 2008 the KACC and the lawyers for the UHDL recorded a consent order in court for the removal of the joint receiver managers of the hotel and handing over the management of the hotel to CBK, who are the initial chargee as of 1993. Secondly, after taking possession of the hotel, the CBK appointed the reputable and professional firm of Ernst Young as receiver managers for the hotel. The hotel is, therefore, currently under the management of the CBK-appointed receiver managers. The mandate of the CBK does not extend to running of any commercial business. It is also a known fact that receivership is a very costly exercise and, accordingly, I have directed the CBK to move and dispose of this security, that is the hotel, at the earliest opportunity. It is not in the interests of the public to have the hotel in receivership for a period longer than it is absolutely necessary . Mr. Speaker, Sir, I also want to clarify that the CBK has a duly registered charge over the hotel. The CBK will, therefore, be selling the hotel under its statutory power of sale. The modalities of sale in such circumstances are provided for under the relevant law. I would like the House to ignore media reports that have purported to state that I said that it would be sold by auction. I do not know where they got that impression from. The modalities of the sale are provided for under the relevant law in exercise of the charge. 722 PARLIAMENTARY DEBATES April 29, 2008 The hotel has been duly valued by two independent valuation firms and the public is, therefore, assured that the sale value of the hotel will not be less than the highest open market value obtained during the valuation of the hotel. Even as the CBK moves to dispose of the hotel I have asked it to be sensitive to the fact that the hotel employs directly more than 400 Kenyans. Consequently, the CBK will endeavour to sell the hotel as a going concern, so that the livelihoods of the many Kenyans working at the hotel, their families and dependants are not jeopardised. It would be irresponsible for CBK and, indeed, for any person, to sell the hotel in a manner that does not take into account the welfare of the many Kenyans working at the hotel, or those deriving a livelihood from interacting with the hotel. Mr. Speaker, Sir, as a Government, we will take very keen interest in the sale. Therefore, I will consult and guide the CBK in the sale process in order to ensure that the sale is conducted in an expeditious and cost-effective manner. I also wish to state that it is not true that the hotel has been sold to the sold-called \"Meridian Arab-African Investment Company\" as claimed by Mr. Imanyara in this House last week. It is not also true that the Government has given amnesty to Mr. Kamlesh Pattni and his associated companies. That cannot be done without the approval of the Attorney-General, and I do not have such an approval anywhere in my records. My understanding is that all pending criminal matters are to proceed to their logical conclusions. However, following the handing over of the hotel, the civil suits - I think it is important that we distinguish civil suits from the criminal suits - that surrounded the disputed ownership of the hotel will naturally collapse. In conclusion, let me underscore that the action taken on this matter by the various concerned Government agencies is unprecedented and exemplary. Therefore, I urge all parties with illegally-acquired property to come forward and surrender the assets to the concerned Government agencies now that an example has been set. The CBK, and other concerned Government agencies, should be lauded for the efforts made in this complex and protracted matter, and for the huge recovery that will be made once the hotel is sold. Thank you."
}