Minister appears to have gone against key clauses in the Privatisation Act
In law, every person is entitled to the right to silence. In Kenya, this right is enshrined in section 77(7) of the Constitution which says that no person shall be compelled to give evidence at his trial. In the US, this right is secured by the fifth amendment of the American Constitution. When a person opts to exercise his right to silence, he is said to have “taken the fifth”.
Listening to the Finance minister Amos Kimunya over the recent past, a good lawyer would advise him to “take the fifth”. His explanations over how he got to sell the Grand Regency Hotel have become so convoluted. The more he explains his conduct, the more he incriminates and convicts himself.
But before advising the minister that everything he says can and shall be used against him, I wish to also secure for him another of his constitutional rights. Section 77(2)(b) of our constitution says that every person charged shall be informed as soon as reasonably practicable, in a language that he understands and in detail of the nature of his offence.
He has acted contrary to the Privatization Act, Act No. 2 OF 2005. This Act was introduced with the intention of changing the way we have previously dealt with the disposal of public assets. The law is meant to make the Government more accountable in its transactions and to secure for the public the best return in this regard.
Effective date
The Privatization Act was granted presidential assent in 2005 and commenced by none other than Mr. Kimunya in December 2007 when he also appointed a Privatization Commission as required by the Act. The effective date of commencement was January 2, 2008.
It is interesting to note that Mr. Kimunya never wanted to commence this Act and was literally forced to do it. In August 2007, the Speaker of the National Assembly gave him seven days to say when he will commence the Acts. Instead, he put up advertisements seeking applicants to the position of Chief Executive Officer of the Privatization Commission.
But he could not explain how he could employ someone to be the executive of a body that did not exist because the law had not yet come into force. He only agreed to commence the Act after he was sued. In fact, he did it only a few days before the case came up for hearing last December. But still, he postponed the commencement for a month to January this year.
Anyhow, the first business required by the Act is the formulation of a privatization programme. This is a programme that lays out what, how, and when public assets will be sold. The Commission is supposed to forward this programme to the Cabinet for approval. When approved, it is then supposed to be advertised for the public to see.
Last year, Mr. Kimunya came under a lot of pressure for proceeding with the Privatization of Safaricom without going through the provisions of the Act. One would therefore have expected that since he had not commenced the Act then, he would have heeded the Act this time round.
One would also further have expected that the Minister would have taken the chance of the sale of Grand Regency Hotel to operationalise a law sponsored by his own Ministry and over which he is the supervising Minister. But more importantly, one would have expected Hon. Amos Kimunya to find himself as a subject of the law and to obey the law that requires him not to unilaterally sell off government assets without the approval of the Cabinet
When he spoke to Parliament two months ago, he said he had instructed the Central Bank to dispose of the Hotel “at the earliest opportunity”. But it is this much unfettered exercise of discretionary powers that the Privatization Act was aimed at. Who said that the selling of Grand Regency was the best decision in the interest of the Public? Didn’t the then cabinet minister Raphael Tuju recover K.I.C.C. building and immediately thereafter, the then Finance minister David Mwiraria put it under a state corporation? When was the decision made that the government was not interested in keeping the hotel?
Under the Ministry of Tourism, the government has a parastatal called the Kenya Tourism Development Corporation which actually owns hotels. Who decided that it would not be in the public interest to place the hotel under this cooperation? Indeed, K.I.C.C. has for decades wanted to have a hotel so that it can sell conference packages that include hotel accommodation. Who decided that it was not a good idea to place Grand Regency as a KICC hotel?
The person who made those decisions appears to be Mr. Kimunya. But it was not a decision for him to make. He lost that when he commenced the Privatization Act. The law today is that all the Privatization of government assets must be considered by the Commission and approved by the cabinet. Mr. Kimunya’s actions go contrary to the promise that was made by his predecessor Mr. Mwiraria when he told parliament:- “This will not be a blanket privatization of everything the government has interests in. it will be selective privatization because the government must have control of those corporations that offer essential services”.
Beyond the decision to privatise the Grand Regency Hotel, there is the question of the procedure. The Act sets out the methods to be used in liquidating public assets. The Act says that, this can be done through public offering of share, concessions, lease, management contract, and sale of assets, liquidation or any other form approved by the Cabinet.
The Act demands that every privatization must be done in an open and completive way with a view to ensuring that the proceeds received are a fair value of what is privatised.
Mr. Kimunya says that the deal he got was too sweet and infact suggests that Kenyans should be clapping for him. But who decided this was the best price? Who decided on the best way to sell the interests? This was only a decision that could only have been made by the Privatisation Commission and the Cabinet.
According to Mr. Kimunya himself, the Hotel was valued at Kshs. 2.1 Billion in 1997. He then said that 10 years later, it was worth Kshs. 2.9 Billion. While real estate values in Kenya have been increasing leaps and bound, the value of Grand Regency Hotel went up by Kshs. 800 Million in 10 years.
An interesting provision in the Act relates to the eligible investors. It says that both Kenyans and Non–Kenyans are eligible to participate in any privatization it then says that the Minister may issue guidelines setting up a minimum level of participation for Kenyans.
Mr. Kimunya seemed to have reached a decision that Kenyans should not buy Grand Regency, despite the often stated government commitment that Kenyans be encouraged to purchase public assets that come up for sale.
Better price
Looking back at the oversubscription of Safaricom, I think Grand Regency sale would have fetched more money from the public. This is one decision that the Act leaves for the Minister to make. Did he make a wise decision?
The concern, however, must extend to the many other decisions we have left in the hands of Hon. Amos Kimunya. Have these decisions been in the best public interest and how have they compromised the tax payer. For instance, it took 2 years for the minister to bring into force the Privatization Act. Was that in pursuit of public interest?
When he said last year that he would not investigate the owners of Mobitelaea, was that a decision made in the public interest? And why is it that a public tender was good for the sale of Telkom shares but not good for sale of Grand Regency.
Those who want to defend the minister must ask themselves one question. What was his motivation? Why would he go to all those lengths to do it the very wrong way? How come he cannot show any action or decision he made that has a trace of protecting the public interest in regard to Grand Regency?
