Hotel scandal with minister and Libyan investors biggest in Kenyan history

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A global anti-graft organisation has urged Kenya to investigate the controversy surrounding the sale of a top hotel to some Libyan investors.

The five-star Grand Regency in Nairobi’s Central Business District (CBD) is at the centre of major financial scandal.

The scandal, sparked by Finance Minister Amos Kimunya’s revelation that the government sold the hotel to Libyan investors last week, has seen Kenyans from all walks of life demanding the minister’s resignation.

Kimunya confirmed Friday that the hotel had been sold to a Libyan government company, the Libyan African Arab Investment Co., for 2.9 billion shillings (about US $45 million).

The Kenyan chapter of the international corruption watchdog, Transparency International, is challenging President Mwai Kibaki and Prime Minister Raila Odinga to get to the bottom of the scam and establish how the hotel, a public property, was offloaded under unclear circumstances.

“Kibaki and Odinga should tell how the five-star Grand Regency Hotel could have secretly been sold by the Central Bank of Kenya to a Libyan government company”, the Kenyan chapter of the watchdog said.

Kibaki is the President of Kenya, while Odinga is the prime minister in the Grand Coalition Government formed earlier in the year, following the post-election violence sparked by the disputed 27 December elections.

The polls which saw both incumbent Kibaki and Odinga, then the chief opposition challenger, claim victory sparked a nation-wide violence which left 1,200 people dead.

Grand Regency Hotel, built in the early 1990’s, is today one of the top hotels which is frequented by visiting dignitaries.

It has been at the centre of controversy for the last 12 years or so following an ownership wrangle between the Central Bank of Kenya and a private firm, Goldenberg International.

Goldenberg International, associated to businessman-turned preacher, Kamlesh Pattni, was in itself at the centre of a purported gold export scandal which saw the country lose billions of Kenyan shillings.

The stinker saw the company receive ‘gold and diamond export compensation’ from the Central Bank of Kenya, yet Kenya is not to have deposits of gold or any other precious metal.

So complex was the rip off and business transactions, that put together, it is estimated to cost the Kenyan taxpayer US$ 1.6 billion.

It remains the biggest financial scandal that has hit the country.

In April, Pattni handed over the hotel to the Central Bank, saying he wanted to end the protracted court battle.

“The hotel represents the taxes of Kenyans, and its sale or retention as a going-concern should be in the interest of the citizens of Kenya as opposed to a narrow group of individuals,” Transparency International Kenyan executive director, Job Ogonda, said in a statement.

“Should there be a sale, the process should be transparent and in line with basi c tenets of integrity; competitive bidding and open to public scrutiny,” Ogonda said.

Trouble started Friday when government officials revealed the hotel had been sold without going through a competitive bidding process.

Lands Minister James Orengo said Thursday that, without his knowledge, his ministry Wednesday had lifted restrictions blocking transactions on the hotel’s land.

Cabinet ministers condemned the sale and demanded that the transaction be halted and investigated. One minister has called for Kimunya’s resignation.

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