President Uhuru Kenyatta has authorised the Treasury to pay out Anglo Leasing debts with immediate effect.
In a statement sent by State House spokesperson Manoah Esipisu to newsrooms on Thursday, President Kenyatta also ordered fresh investigations into the Anglo Leasing transactions.
“The government has exhausted all judicial options to forestall payment of the judgement debts and the way forward is for the government to settle to minimise further loss as the outstanding awards continue to accrue interest. It is therefore imperative that these debts are settled. “Government has today, therefore, authorised the Cabinet Secretary, National Treasury, to pay the judgement debts with immediate effect,” read the statement.
“By making this payment, the President is not legitimising what he and many Kenyans believe to have been a series of fraudulent transactions. Therefore, the President has ordered fresh investigations into the cases.
“Kenya now has a fully constituted Ethics and Anti-Corruption Commission which can and should take this process forward. There are also other agencies, including parliament, that could play a role.”
The government has been pushing to pay the Sh1.4 billion to Anglo Leasing because it fears it could be shunned by international financiers for failing to honour its debt obligations.
The two firms are Universal Satspace LLC of America and First Merchantile Securities Corporation.
In December 2013, a London Court made an $18 million (Sh1.5 billion) award against the government to First Mercantile Finance Corporation.
Last month, the Swiss company gave the government an ultimatum to pay up or have its properties abroad attached or auctioned.
There are also fears that if the country fails to honour its international debt obligations, it is likely to be down-graded in terms of its creditworthiness.
This will mean that the government will be forced to depend on domestic borrowing, a development that could mean higher interest rates and higher inflation.
However, former Ethics and Governance permanent secretary John Githongo, who blew the whistle on the Anglo Leasing scandal dismissed plans by the government to pay Sh1.4 billion to two companies.
Mr Githongo has said that “powerful vested personal interests” are behind the push to have the money paid, terming it as akin to “throwing one’s wallet in a pit latrine”.
“One of the companies seeking to be paid was registered in 2005 and yet the Anglo Leasing scandal was discovered earlier than that,” he said.
“Paying the alleged billions to the two companies that are pushing to be compensated is like throwing your wallet in a pit latrine,” said Mr Githongo.
He said that in fact the actual value of the contracts behind the Anglo Leasing scam was around Sh65 billion.
“It is very well known to the public that these were a series of 18 contracts that were barely executed,” he said.