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Kenya government gifts major hotel to Libya for peanuts

Wolfgang H. Thome, eTN Africa  Jul 09, 2008

In an apparent cloak and dagger action, shrouded by secrecy and leaks, the Kenyan government appears to have sold the prestigious Grand Regency Hotel for a pittance of less than 3 billion Kenya shillings (approximately US$45.6 million) to the Libyan government under a private sale agreement. Figures available right now vary between 2 billion and 2.9 billion Kenya shillings.

It has also became evident that no public bidding or tendering was chosen by the promoters – or should one say perpetrators – of the deal to maximize the proceeds of the sale, as a number of international hotel chains had of late expressed interest in coming to Kenya and may have wanted to make offers for the Grand Regency themselves.

Other and clearly larger sections of government, key players of the business community and society condemned the sale as a give away and alleged fraud and corruption. Conventional wisdom puts the actual market value of the property at least between 6 and 7.5 billion Kenya shillings, i.e. at least three times the “sale price,” while one leading realtor put the price to as high as 10 billion Kenya shillings.

The Grand Regency was also at the centre of the biggest Kenyan corruption scandal yet, the Goldenberg Affair, where some 150+ billion Kenya shillings are said to have been swindled from public coffers through an “export compensation scheme” for faked gold exports with connivance of senior most politicians, power brokers, bureaucrats and central bankers at the time.

The Grand Regency Hotel is located at the edge of the Nairobi central business district along Uhuru Highway and overlooks the city centre park. It has carved itself a sizeable slice of the upmarket hospitality business in spite of its problems on the financial side and being under receivership and under public scrutiny since the main architect of the Goldenberg Affair Kamlesh Pattni bought it with his ill-gotten wealth, incidentally for 4 billion shillings at the time as his long time lawyer just confirmed. Pattni had not too long ago handed the hotel back to government when withdrawing his legal cases from court and now claims to have been granted amnesty for any other pending charges over the Goldenberg scandal in exchange for the handover of the hotel.

Kenyan Finance Minister Amos Kimunya appears to have deliberately misled the public and parliament with his earlier statements, when he had insisted all along that the hotel had not been sold, only to change his tune now in the face of emerging evidence, compelled to finally admit to the dirty deal. He also evaded appearing before a parliamentary committee, which has demanded answers from him and has called for his sacking and censure, as did in fact some of his cabinet colleagues from the other side of the coalition. Speculation is now rife in Kenya over the true value of the transaction and what other favors or cash may have changed hands alongside the “official” payment of 2+ billion, but in any case this latest development is only one in a long line of seemingly corrupt practices perpetrated against Kenya by politicians. He has since resigned as Kenya’s finance minister.

The deal may also put more pressure on the fragile balance of the coalition government, as opposition members of parliament and back benchers of the coalition may now jointly resort to more investigations, so as to unearth the masterminds and beneficiaries of the deal and bring them to justice. Ultimately it may in fact become a crucial nail in the coffin of the power sharing agreement between President Mwai Kibaki’s Party of National Unity and Prime Minister Raila Odinga’s Orange Democratic Movement, if the fallout indeed spreads into the top corridor’s of power as it is now alleged, since the former finance minister is a close ally of President Kibaki. The affair may cause political heads to roll as it is expected and demanded by the Kenyan public. The Sunday newspapers were full of scathing criticism and minced no words as commentator after commentator and most published letters to the editors poured anger and scorn over the implicated politicians.

This is the second major corruption scandal hitting the Kibaki administration, after his first government was also saddled with a multi billion procurement scam, not resolved yet in any court of law and subject to ongoing bitter disputes amongst political factions.

That all said, Kenya continues to be a fundamentally strong country having survived all these corruption scandals, the looting of its public coffers and the recent politically inspired violence, giving hope for a better future for the Kenyan people.

(US$1=66 Kenya shillings)

Kenya government gifts major hotel to Libya for peanuts

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