Mystery over US disclosure of Sh139bn Kenya loan deal deepens

A US-listed firm at the centre of a disputed Sh139.5 billion (1.06 billion euros) loan deal with Kenya has made fresh disclosures to the American stocks regulator that the Treasury has dismissed as fake and containing forged signatures.

Kallo Inc reckons in the new disclosures to the Securities Exchange Commission (SEC) that Kenya has frozen the contract for building mobile clinics and upgrading hospitals in the wake of the coronavirus crisis.

The filings with SEC were done on March 25, just two days after the powerful SEC suspended the Canadian firm from trading in the United States for failing to shed light on its earlier disclosure of the Kenya loan agreement.

“We received a letter dated March 22, 2021, from the Cabinet Secretary for the National Treasury & Planning, the Republic of Kenya informing us that the project and agreements that we previously entered into… namely, the Project Contract and the Loan Contract (the “Project”) have been put on hold,” Kallo Inc informed SEC.

It attached the letter, purportedly from the Treasury Cabinet Secretary Ukur Yatani.

On Monday, the Treasury termed the letter fake and a forgery of Mr Yatani’s signatures.

“The letterhead has no reference number used in official government communication and the signature is fake. We will send you letters signed by the CS and you can compare,” the Treasury’s communications team said.

Firms are required to make filings with the powerful SEC if their securities are publicly traded in America, raised funds in the US or have shareholders required to file corporate actions with regulators in Washington.

The Treasury said it would once again inform SEC of the fraudulent disclosures from Kallo Inc and that similar reports would be made to Kenya’s Director of Criminal Investigations.

The Business Daily on March 18 reported from disclosures on SEC website indicating that Kallo Inc had in June last year signed a Sh139.5 billion (1.06 billion euros) loan deal with Kenya to build mobile clinics and upgrade hospitals in the counties at the height of the coronavirus crisis.

The Treasury denied the existence of the loan, and protested to SEC—which suspended Kallo Inc from trading between March 24 and April 7 to “protect investor interest.”

On hold

“There is a lack of accurate information of questions regarding the accuracy of statements the company has made in filings with the commission, including a Form 10-K for the year ending December 31, 2020, filed on March 3, 2021,” SEC said in a statement on March 24.

“The commission has serious concerns, for example, about the accuracy of the company’s claim that it has entered into a contract with the Republic of Kenya to establish a comprehensive healthcare structure.”

But Kallo Inc in the latest filings maintains the loan agreement existed, and that it has only been placed on ice.

“Please note the project is not being terminated but put on hold for a certain period of time,” said the letter purportedly signed by Mr Yatani that Kallo Inc filed with SEC.

Kallo Inc failed to respond to Business Daily’squestions on the loan deal.

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